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Xbox Live Gold changes to Game Pass Core
(yiffit.net)
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On your first point, this is a standard upsell which will easily get people up to the second tier. After that they can start increasing the prices and bridging the gap in cost once they have onboarded as many people as possible.
A $1 up sell? Really? That just seems like a waste, they should drop core to $6.99 and pop the next level to $11.99 or so, that dollar just looks stupid.
$1 extra each month is nothing for you, but $1 extra from hundreds of thousands of subscribers each month is a lot of money and is exactly the point of the upsell strategy. Make the first tier undesirable so no one will want it.
This is exactly why every fastfood place has at least 3 sizes of cups. If you have 2 sizes, small and large, nobody will buy large. Rename "large" to "medium" and add a third size, and people will buy a lot more "medium" sizes.
But then they ramp the difference up to $10 once everyone is subscribed.