Here is my current stance on streaming. The technology is shit, and will always be shit. Stadia has the exact same problems OnLive had 10 years ago. The companies can claim they fixed this or that all they want, they are lying. Because we are talking about the nature of physical reality here. It will always be laggy, it will always have image quality issues, it will always be shit.
You make good points.
There are certain games that work
extremely well through streaming. There are certain other games that work
extremely poorly through streaming.
The games that are best suited to streaming tend to be turn-based games, or games that don't require precise hair-trigger inputs. Fast-action games that rely on quick and precise inputs (such as fighting games and shoot-em-ups) tend to suffer the most.
On top of that is the push to get so many of these games streaming on mobile phones. Not only do you have to deal with the technical issues that you described, but also the notion of taking a user interface intended for a big screen with PC/console style controls, and tossing it onto a smaller device which primarily uses touch screen controls. Again, there are certain games that are much better suited to this format than others. You could bolt on physical controls to deal with the problems of the touch screen interface, but that is expensive and unwieldy.
So ultimately the question is will people just accept a shitty product because it's more convenient? That is what happened with mp3s after all. Except back then, buying music was really expensive so getting 80% of the experience for 0% of the cost was really attractive for obvious reasons (especially when music was marketed to teens who had little money). But gaming isn't really like that. Gaming is really cheap and convenient these days. Fortnite is a free game, GamePass, Steam sales, etc. What is Luna giving me over GamePass that would make me accept a shitty, laggy, macroblocking video stream over high quality native gameplay?
We'll have to wait and see. Luna could see at least some level of success if they get the right mix of games at the right price.
Some advocates of these streaming services think that all they need to do is sign up a bunch of existing PC/console games, throw them on the service, and then sit back and watch the profits roll in. They believe that this is some quick-and-easy golden ticket to riches for the tech giants.
I remember all of the hype for Stadia, where some people were beating their chests and telling us "They've eliminated the barrier to entry" and "you don't need a console anymore" and how you'd be able to play games by clicking a button on a YouTube video, and so many other
wonderful things. Then Stadia actually launched, and a lot of the hyped up features were either removed or dramatically scaled down.
You're also right about online MP3 sales. Music is a non-interactive media format, and the easy and cheap availability of MP3 presented a great convenience factor, with little to no noticeable reduction in quality. We cannot say the same for streaming video games.