It's that chicken-and-egg problem where people don't want to use it because it doesn't have the apps they need, and developers don't want to make apps for it because it doesn't have enough users. Microsoft tried to throw money at the problem to middling success. But I think it was too little too late.
I would guess that they aren't the only ones. Do you think LG/Sony/Samsung/roku/apple tv/firestic/etc all got the netflix app ported for free? Maybe. Plex probably isn't getting paid, and they do it too..
But MS was a special case, it seems to me that every time I looked at CE/Mobile/etc they were tossing existing app compatibility aside for the latest and greatest toolkit that went with some not particularly good set of phones.
Their (forward) app compatibility was actually very good. I wrote a WP7 Silverlight app in 2011 that still works on the last release of Windows Mobile 10.
It was just monopoly abusing its walled garden and being anticompetitive, nothing else. Not that Microsoft would behave any differently, if the positions were switched.