That's the beauty of it, you have your opinion and I have mine. I can't say you are wrong but it's unrealistic to think every studio will have unlimited budgets to make their games. I'll just say that teams working under a budget doesn't mean they will put out bad games. Most games I love were made with very tight budgets.All evidence points to the opposite so far.
InXile, Obsidian, Double Fine and Compulsion Games had to crowd fund their latest games.
Obsidian, InXile and Compulsion Games are now all making AAA games.
Double Fine has been given more funding to add bosses, and levels they had to cut from Psychonauts 2 due to budget constraints.
InXile and Ninja Theory just got all new offices to further expand their team sizes.
Playground Games has gone from a one team studio to a 2 team studio with each making AAA games.
There is now more incentive than ever to make bigger budget games. Look at the streaming wars going on in Television right now. Game of Thrones was the king because of the show's spectacle.
Big games are going to draw people to the service and big games will keep people subscribed.
Fortnite BR started as a budget secondary mode. More companies have realized not every game needs to have a mind-boggling budget. This lower budget games will do wonders in GP (either from third party or first party).
In the end I don't think Jim is wrong since they are targeting a different strategy than MS.
Which one will work better? We will know when either company shift their strategy again.