I think Microsoft's hybrid approach with Gamepass, which to a lesser extent Sony has going with PSNow, is superior.
A one time download simply makes more sense to most of the target audience. I'd rather deal with that over latency issues, even if it means spending an extra 2-300 up front.
Another issue is cross platform play. If I were Sony, Microsoft, and Nintendo, I would allow cross platform play among those systems, and not with streaming company, assuming that is not considered collusion. Alternatively, just stop cross platform play altogether. Having platforms where gamers are already congregating as opposed to new growing platforms is an issue.
There's also a possibility of oversaturation in the streaming market. With Netflix, Hulu, Amazon Prime, HBOGo, Peacock, Youtube Red, Disney+ and so on, a lot of people are saying fuck it.
Streaming games is a good proposition at 10-20 per month. But, the average gamer is only buying a couple of games a month at most, possibly not at full price. So, if it gets to a point where you need 5 streaming services to play everything you want, gamers might just say fuck it. Maybe they'll keep whichever service they think is the best, and just buy other games individually. That's what I plan on doing as of now, mainly playing on Nintendo, and supplementing with Gamepass (and the occasional PS4 game).
Nintento is in an odd position. They're slow to adapt, but they may need to. They have an advantage in many ways with a first party lineup, and an extensive back catalog. But... I'm not sure Nintendo can feasibly do something like this. Gamepass is clearly a loss leading proposition, and Nintendo really can't do that. I think for Nintendo, the future may be something like a Nintendo system that features one of the other services, in addition to selling most first party games separately. So, Nintendo gets people to buy their systems for first party software (people have already shown a willingness to do this, and to pay a premium for Nintendo games), get some sort of kickback when gamers use Gamepass or whatever on their system, and still sell some third party games separately.
Nintendo's real ace in the hole though is hardware design. Wii, DS, and Switch succeeded largely through innovative hardware that couldn't be easily replicated (without doing something like Kinect or Move and fragmenting the market). So, the hardware itself could have features that can't be done on other platforms. Even with streaming on phones as a possibility, the Switch still has obvious advantages over gaming on a phone (detachable players for multiplayer, ability to play with weak or no internet connection). Their next system will have to have compelling features that are not practical with a streaming device.