Netflix gives me unlimited access to an enormous library of content for $8/mo. Playstastion Now gives me temporary access to individually purchased items. The two are nothing alike, other than the fact that they transmit temporarily owned content over the internet to the customer.
As to the pricing issues -- yes, they are destined to fail. Netflix and Amazon Prime made it cheaper and easier to pay for content than for people to acquire it through other means. Services like RDIO made it almost absurd to bother acquiring music any other way, for the mere $5/mo. A gaming service could accomplish this, but they need to provide a massive catalog of consistent content without a thousand strings attached and for a really low price. Additionally, it needs to be through a unified distribution channel; nobody wants to subscribe to EA, then to Ubisoft, then to Valve, then to Activision/Blizzard, then to Riot, then to Sony, then to Microsoft.
Gaming suffers from the problem television still does and that others (music and movies) used to (but still do, to a smaller extent). They want to profit from constraining their distribution; not operate like the manufacturer of ANY other product. Almost every company in the world wants their product in as many stores as possible for as many avenues to the customer as possible. They don't care if they're sold at the gas station, convenience store, Amazon.com, Target, Albertson's, and Safeway. Unfortunately, when it comes to digital media -- especially games -- some are available only on Origin. Some only on Steam. Some only on GOG. Some only on one platform for awhile, then no longer. This model has to change. Constraint and hassle needs to be eradicated. Distribution channels need to compete not on exclusivity, but on price and service and interface and community.
Until that happens, this ridiculous "pay a dollar or more an hour for a twenty year old game streamed over the internet" idea is dead.