Yeah I agree that is where we're heading. The only obstacles now are technological rather than ideological for the majority of people (ie what people on this forum like is kinda irrelevant. That's why music and tv/movies have pretty much completely moved to streaming (of course people will probably always go to the cinema because it's an experience almost nobody can reliably replicate at home, just like people will go out to eat dinner when they can cook at home).
I already moved to music streaming and video content streaming because it's more convenient and gives me access to a wider variety of content at a low, almost forgettable monthly price. I have no real interest in owning music or video content and it's the same for games. If I can pay a low monthly price and have access to games I like to the point that I feel I've consumed enough value to make it worth it, then I'm happy.
Game Pass is a good value proposition (for the consumer, not really bothered what is good for developers) but I wouldn't do streaming because I'd rather not deal with the internet connection speed and latency/input lag-related issues.
If you think about it, it's all about the games, not the physical platform. You can still have platforms and platform holders (and competition between them through exclusive games, timed exclusivity etc, just like we have with Amazon Prime video vs Netflix) but it'll be in the cloud. I don't see why the majority of people (again not people on GAF) would bother with a physical device once the technological issues are ironed out.
Besides, when I was kid I used to rent games, finish them in a few days and take them back. Compared to that, Game Pass (or insert game subscription service, GP is just the first one that springs to mind) is (potentially) much cheaper on a per-game basis if you're the type to dip your toes into various games on and off simultaneously. It used to be like 3 or 4 quid to rent a single game for a couple of nights. In comparison, you can now pay 11 quid and get access to whatever you want for the whole month. If you were to rent one game every 3 or 4 days you'd be looking at 30-40 quid a month.
It's really just the same thing but you don't have to physically go to the store to get the game and then take it back. In short, people who derived value from rentals would obviously derive value from a subscription service.