I don't mind if they keep the games coming. But unfortunately as of the last 2-3 years, I've been pretty disappointed with Microsoft's game selection. Halo 4 gets a pass because it's a new developer and while I over-all enjoyed it, I won't buy 5 if it continues to be "wave after wave" type fights. Forza is always good.
With that said, I hate the ads, I hate the interface, and my 360 only gets turned on because it has HBO Go and my TV and BR player do not. It really has just started bugging me these last few months. Haven't really cared otherwise as games startups are quick, navigating isn't too much of a problem, but Netlix on my SmartTV is 10x better.
MS has an incredibly uphill battle to win a purchase from me. I was a huge 360 fan (loved the games, loved the system, loved the interface) up until about the time they started changing everything to be more "kinect" friendly. I had one, it was a fun little distraction and being able to use voice commands in Netflix was awesome, but overall it didn't 'improve' my experience enough to warrant changing the entire interface to work with it.
If the games are there, I won't really care all that much. But lately (at least the past 2 years) I just DO NOT see MS focusing on the games side of things. I think they will be in for a rude awakening if they assume that all these Live users are paying for Live to watch TV. That's a side affect of having a bunch of gamers with little interest in your games output and being bored with this generation (IMO of course).
You still haven't explained why Durango acting as a TV hub is a bad thing for gaming.
While people love to believe that MS has infinite resources, they do not. This means that XBL and Interface related options are going to be heavily influenced (as it is now) with decisions based around the functionality of television, not games.
Imagine if your favorite restaurant changed its atmosphere to everything "reality TV". It's still the same food, but you are surrounded in something you are completely disinterested in. That's what worries me and the slow acclimation of gaming space towards 'media' on XBL as-is has been worrisome but tolerable. I have a feeling that will change.