The issue will if MS wait and wait until Linux gains momentum, it could be too late. If you get people changing to Linux enough to make MS take notice, by the time they've addressed their issues, there'll be all that existing motivation to switch. I think there are lots of PC gamers who'd be happy to move away from Windows if there was a viable alternative and the transition could rapidly snowball as gamers start switching to something SteamOS like and report it's a real positive. MS would then rush out their improvements and gaming dashboard etc., but if Linux is working, why go back to Windows?
In short, where the competition at the moment isn't any sort of competition and MS doesn't care, if it becomes valid competition, MS will struggle to compete. And they won't be able to just buy Linux to put an end to it. TBH I hope it happens. As iOS found, games drive adoption unlike anything else. A new gaming-focussed OS would open the door to a real Windows alternative and shake up the computing industry from its MS monopoly. The lack of software on Linux has really held it back. If it can not only play all the games Windows get, but actually play them better, that barrier is gone. Then it's a matter of usability. You'd have a real competition again, between MS trying to make Window's simpler and less kludged and good for gaming, versus 'Linux' trying to make the OS more accessible and easier to use for the everyman with more productivity etc.