Sony and MS, at least for the start of each launch, have lost money on the hardware.  But the focus here is not the hardware, although using your figures, $150 * 50 million = 7.5 billion dollars of money that sits in an escrow earning interest for your company -- that's not too shabby.  The cost of the hardware is basically break even.  The real profit is in the monthly subscriptions.

For the developers, it isn't a one time shot of 2 to 3 million copies at $60 for real blockbuster games (not all that common), most of which is eaten up by retail and distribution costs.  Instead, it's a monthly revenue stream -- WAY MORE VALUABLE -- that could end up lasting years, and years. 

The problem I have with outright buying the console is that it is worthless if you stop the subscription because you can't play the games.  You don't own it.  But there will always be the "other players" in the field that you can spend $$$ on, wait in line for the console launch, fight christmas crowds, prepay for reserved copy of the game, have to deal with stock shortages, etc. etc.  This concept solves...all of that.  Game comes out, EVERYBODY has access to it first day.  No waiting in line, although you're welcome to if you really want to.  LOL!

Think of your internet connection.  If you stop paying for your connection, isn't your DSL or Cable modem worthless?  Did you buy it or lease it?

The $150 is basically to secure the "value" of the console.  Prevent people signing up and then walking off with the console with no way to recuperate the value back.  If you know you'll get money back on something if you return it in working order, you're more likely to take good care of it.

Okay yeah well that's making more sense now. Seems like a steal for the consumers though and kind of a ripoff for game developers. You said game devs would be paid based on time people spend on their games, so that will kinda suck of Activision gets like 50% of the total revenue because people spend so much time on the Call of Duty series, it would seem even harder for niche games or creative games like Heavy Rain, LA Noire, etc. to prosper. I think that would lead to even less new IP's which is a problem we are facing now already. 

I think that is a damn good deal for the consumer, but it will kill most developers. Online will be a must for all video games except the most massive rpgs. A game can have the most unbelievable campaign, but if it only lasts 8hours and there is no online, the developer is screwed. I don't think something like this will ever happen except for a slight maybe first party games for consoles. It will basically kill of any game without an addicting multiplayer.

I would not mind this as a suplement to the current way things are, but  YOU WILL NEVER TAKE MY PHYSICAL MEDIA AWAY FROM ME...at least not completely...

I would like this idea if I was the one making the money but customers would not go for this unless they saw incredible value. There would be no value because there would be no games. There would be no games because developers wouldn't be making any money from their games after the $20 monthly subscription. How would you determine who gets what as a developer.

If the idea 'could' work it may lift the videogame industries profits through the roof since it would be like WoW.

it would definantely cost a lot more than 20$/month if the install base doesnt rise a lot, i would rather just buy what i want

Hmmm, well the reception has been interesting.  

homer: Have you ever tried Gamefly, Netflix or iTunes?  Owning physical media is becoming obsolete.  The new models are "services".  Instead of paying $$$$ to own a few, you pay fewer $$ to be able to use many.  Owning the physical media has inherent risks and limitations.  Aside from potential damage to the media and/or the console, there's also misplacing it.  And generally the convenience factor and reduced TCO of using a service makes it well worth it.  I certainly felt the way you did when it came to DVDs.  I switched to NetFlix because I figured it was less cost and I'd only buy DVDs that I really wanted to add to my library.  Now most of my DVDs sit unused in a container because everything I watch is through Netflix.

A_C_E: just like all consoles, there would need to be an initial library.  You say developers wouldn't go for it. I wouldn't be so sure.  There are many positives for them.  No piracy.  Continuous revenue stream.  No distribution costs.  Ability to fix problems after release without major expense.  Lower cost to develop.  Marketing would not need to be focused on a major campaign, it could instead be spread around and extended due to the extended life of the product.  All of those are major selling points to the people who run the companies.

All:  Look up "disruption strategy".  Yes, it is not a top of the line product, but it is an adequate one that provides high value for low cost.  I think it fills a niche demand, solves problems with the current system.  As the user base grows and more people become "online consumers", the amount of funds going to the developers who risked it first would get larger and larger.  More developers would want a piece of that growing revenue stream.  I think that follows the disruption strategy well.  It's positioning the company in a place where the people will be in the future.   Netflix disrupted Blockbuster.  They are in a very dominant position now and going to be harder and harder to beat.  All they were offering was "old movies and some new" for a very low price.  Nobody would want streaming videos, the quality sucks, right?  Well, looky looky where the market is going...and Netflix is already there with their product in many devices already in homes and an ever growing subscriber base.

Would onlne multiplayer games pull the largest share of the revenue stream?  Well, I have to concede that may very well be the case, at least initially.  But I also think saturation would occur.  Enough online multiplayers competing for the time, yet not everybody likes online multiplayers.  So the segment of the market that likes the online multiplayers has their time split amongst a growing number of muliplayer games.  Eventually that evens out with the games that take 10 to 16 hours to complete that aren't online multiplayers.

Personally, I prefer games that have a certain level of replayability and I have no interest in online games.  Of course, with the low post count I have, yet I've been on VGChartz for many years, it should be obvious social things aren't my cup of tea.  

But with the developers able to make changes to it even after it's been distributed, more games can be more replayable.  That variety could very well compete against "random people" who you are put up against in other games to keep your interest.

I'd show middle finger to any company that pulls crap like this.