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Ganoncrotch said:
Why would the service be required? say if a certain 3rd party game is on Gamepass but someone just owns it on the PC/PS4 what would be the reason for disallowing them from taking part? Am I missing something here, just that I do not really sub to a lot of things (Nintendo online network/PSN+) but I do own a metric ton of games so it's likely I would own games you are thinking of having competition in.

I'm mildly interested in some aspects of this idea.

The OP mentioned that the winner chooses the next game.  That would really only work if everyone is subbed to the same service.  

I will say that this subscription required aspect might make this unworkable.  Possibly, it limits the field of possible participants too much.  But, without it, the fundamentals of the idea would have to change.  It would just become something like random game tournaments.  That's problematic too, because the field of people interested in participating would then be limited to people that have X game.