I have no idea about the rumored exclusivity or not exclusively, but regarding the Series S it seems really simple to me: the developers just need more time to properly optimize, and I do not mean just for Series S. I was considering picking the game up on PC and checked out digital foundry's review and then I just chuckled to myself and said no. As an outsider looking in, the accolades Black Myth Wukong has received has really shocked me. I mean, I'm not a huge souls like or soulsborne guy so maybe I just don't get it, but the game seemed pretty good with a lot of technical issues from what I could gather. The fact that we're in a year where Space Marine 2 or Lost Crown could drop and be amazing in every way and not even get nominated at TGA just saddens my soul.
This also just shows where we are as a industry and what are place is as consumers. The developers could've delayed until the Series S version was done and that would've likely led to improved performance across all platforms. They didn't and consumers got a worse product as a result, and the industry harkons the blame toward Xbox. Development wise, this generation has been a mess. A LOT of brute forcing. In the US cars and traffic remain a massive problem, and I remember asking why we don't just build more lanes when I was younger (in one of the levels of school). Then being shown that more lanes just leads to more cars on the road and more congested traffic and the chance of an accident goes up as well. That's what we're experiencing now. This Gen wasn't just the law of diminishing returns. It's developers and publishers realizing they can brute force games more than ever and doing less actual work to optimize. That's not mentioning all the upscaling and frame generation tools.
I definitely think Microsoft Gaming as an entity needs to invest in itself internerally and build up to properly support their strategies moving forward. They can't just be a jack of all trades; they need to be first class in every market they want to compete in. That said, I don't think this is really Microsoft or Xbox's problem (okay, well it negatively affects them, I mean to say the root issue doesn't come from them and it's not their issue to solve). Rather this is a problem the industry is facing and that is coming to ahead with us as consumers. The devs are stating here that they aren't experienced with optimization and the game can't run even passably on the Series S in its current states which has problems across PS5 and PC. And as gamers the industry's consumers answered that they don't care. Moving forward as an industry I think that's a sign of things to come and I can't say I particularly like it.