@bolded: And that's the major issue, try getting stable, fast internet in rural areas. Also, it can consume data caps pretty fast. Being able to download the games is much better for most people.
Second issue is 720p30fps only, no matter if the original game was 1080p60 or anything in between, so most PS4 titles take a visual hit on PSNow. Finally, it's much more expensive than the Game Pass.
The reason why PSNow made more money should be obvious to anybody: PSNow is available on PS4 and PC, while Gamepass only on XBO. Also, PSNow is much older. In fact, for being so much longer on the market and having a much larger potential customer base, PSNow earnings are actually almost pitiful. Considering the cost of the service, it equals to little more than 1M subscribers
My point is GamePass purpose is to eventually lead into Streaming(to be on more than just Xbox) which PSNow has beaten it to the punch in that regard. Not to mention, Sony added the ability to directly download a large portion of the games just like XB1 so that is a moot point.
The quality disparity could def be a big factor...but I question how much. As Sony just said in their Keynote they had a week ago, average consumers do not look at games in pixel ratios. Sure, they latch on to the buzz words but mostly they just want to be able to have the experience for the cheapest and most unhindered. Most of the kids playing on PC are using dated monitors and hardware by Elite Pro standards. Phones and Switch also are not sporting 4K visuals and why would they need to? People will go with what has more of perceived value, usually quality vs Price.
PSNow can be the inferior performing streaming service....but if it is the service with more games and more exclusives on the devices that people predominantly own......then it can maintain it's lead. Not to mention no matter what MS does, their service will not have Sony exclusives which are likely a service seller and decider.
As had been said by others before, you're comparing apples to oranges here. Gamepass is never intended to become a streaming service; that's Xcloud's job. It's also the one Microsoft called the Netflix for games, not Gamepass. The rumored digital-only Xbox One will probably come with just that, meaning it will be an Xbox branded streaming box comparable to the Playstation TV. It's also probably xCloud, and not Gamepass, that will make it onto the Switch.
So nope, Gamepass is a game download subscription service and thus comparing it to a streaming service and considering the lack of streaming the killing feature is just plain wrong. Let's see how xCloud will work out and then we can compare it to PSNow, as that would make much more sense. Main difference between the two apart from the game library will probably be that xCloud will bring the newest Xbox games while Sony waits a couple years before bringing it's newest games to their service.
About consumers not looking at game pixel ratios, that's true... but they probably remember the shiny pictures from trailers and the like and will wonder why it looks much worse ingame.
As an anecdote,or me personally, neither xCloud or PSNow would be good for me. I tried PSNow, but streaming games just isn't for me, which would mean Gamepass would win by default since it's something different entirely.