Go back in history, why did Microsoft create xbox at all? It was Bill Gates fear of being overtaken by some "living room PC" or set top box that never material

Go back in history, why did Microsoft create xbox at all? It was Bill Gates fear of being overtaken by some "living room PC" or set top box that never materialized. It was an industry wild goose chase basically, with echos of past efforts (remember Philips CD-i ?) Is this a concern Microsoft has today? xbox was a money sink from the beginning. The sad part is they bought a bunch of very good game studios.