I don't agree with all of his points. I think we are becoming more and more accustomed to "renting" and also "not owning" media. Basically because so many services offer benefits with it these days. If you think about it, our cable tv services, phone services, and internet services are "rentals" so if companies continue to break down psychological barriers associated with software owning, then I'm sure it will be accepted with time.
Also, it does not have to be primarily subscription based, just like the Wii VC you can pay to have access to a game and then have access to it for as long as Onlive provides service, so technically you are owning the game.
However, I do think that he was on the verge of a great point but didn't quite say it. This industry has had its ups and downs. It has been on the verge of collapse a few times in its past, something that Japan seems to actually be experiencing right now. It has been thriving on new hardware upgrades and extreme changes to invigorate the industry. And while this "could" still be done with Onlive, the chances are much more slim. It would be a huge risk to assume that it would naturally happen. As we have seen with any new hardware, it is difficult to get mass adoption of any addition after the fact. Nintendo's Wii series has been the most successful distributing the Wii Fit board, Wii wheel, Wii Zapper, etc. But typically, this just doesn't happen.
So most likely if Onlive became popular just out of its conveniences and "next step" accessibility, then the industry would most likely reach a screeching halt after a few years.