Very intriguing! Thanks for the news--I had not seen this.
I would think it would be a paid-subscription model for gamers (no doubt with different tiers), with devs getting paid via a similar model as to how music labels get paid for songs when they're streamed. Or maybe there's no fee for gamers at all, with all the revenue coming from ads (overlayed in-game, much like youtube does with its videos). I don't think that would work, for the gamers or the devs, though.
I think, as you point out, the biggest hurdle would be having the kind of broadband service that would allow you to stream a game seamlessly. Unlike watching a show or movie, gaming is not passive--you're receiving the game content while simultaneously sending controller commands constantly, so the stream-signal would need to be very strong.