Industry analyst/economist here. TL;DR: you’re all wrong :)
Game streaming will never replace the current way of playing games because the current ownership model is far more profitable to all parties involved than streaming it all.
Console manufacturers don’t want to replace current hardware ownership with streaming because they would rather have you buy the hardware than just taking a big loss on it to make it up from streaming. Remember, THE HARDWARE HAS TO BE SOMEWHERE. They would rather have you pay for the box (and the electricity required to run it) to run it locally. There’s also the networking and server side of things where entirely replacing ownership with streaming doesn’t make financial sense. It is far cheaper for them to distribute games on a disc or digitally via a one-time download than streaming because after a few hours of streaming use, the amount of data needed to be served exceeds a native download and keeps going from there, and the more data you have to serve out, the more expensive it gets.
Game publishers won’t want to rock the boat much either because they won’t give up the massive amount of revenue they get from big launches to just get a slice of a monthly subscription. While there may be alternative streaming options to access new games, no publisher is going to want to compromise their big launch hauls they currently get.
Game streaming will be aimed at two groups of people who can’t really be reached with the current ownership model:
1. People in poorer developing countries that have good internet infrastructure but can’t really afford to own expensive hardware.
2. Curious potential gamers who want to try a game out but don’t want to invest hundreds of dollars in buying hardware just to play it. There are a huge number of people who would play games occasionally but are totally turned off because of the investment necessary to do so. (This is a big part of why mobile gaming took off so much)
Basically, game streaming offers a way to get to people that can’t or don’t want to go about owning hardware, but because of the extra cost in several areas that comes with streaming, there will never be any kind of push to disincentivise or eliminate traditional local gaming. It just makes too much money!
The only real concern I have about this is that big unsustainable AAA development models can be propped up by revenue from this, therefore delaying or preventing a necessary collapse. In fact, I suspect that hope is why Ubisoft has gone so gung-ho on partnering with Google, because Ubisoft will have to make some really tough cuts before too long unless they get some kind of lifeline like this.