You dont need to protect software anymore, you just lock the console. Software will be "free" as long as you pay to "unlock" the console.
I dont think they need to replace hardware for this. A simple firmware upgrade will do. This upgrade will change the keys, and old software will not work anymore. You then log to Sony validation site and unlock the console, and you can play all the games that you want, for one month - of course, the games will be re-encoded with the new key.
And you dont need to remove ownership, since they are renting "usage", and only if they want to. Nobody promised them that games will be released forever in the current format for the PS3.
Except on the existing 40+ million consoles, you can't protect the new key. So that will be in the wild and available.
You also can't protect the Device ID. Being able to run arbitrary code, you can have your console report back to PSN whatever Device ID you want it to. Spoofing ID's is nothing new. You "could" tie it to your account. But again, with a completely open system, you just end up with the same situation as PC games where the account validation is hacked out and games will be released and available for pirating soon after they are made available to paying customers.
Then you have a problem with how much do you charge. And how much money do the publishers and developers get. It's unlikely that 15 USD a month will be enough. I find it doubtful that even 50 USD a month would be enough. Would consumers be willing to pay 100-200 USD a month?
And that still doesn't address how much companies would get from that. You can't just split it equally. If you did, companies would no longer have any incentive to spend the money to develope something like KZ2, Halo: Reach, GTA4, etc. Base it on time played and some of the smaller developers might get even less money now than they do with the current system.
Which then goes back to how much do you charge each month? Publishers would no longer have the ability to rely on blockbuster sales to fund new IP which might or might not have a positive ROI.
Eventually you'd end up with a system where you'd have mostly PopCap style games. Being a PC gamer, I love this myself, as it would encourage AAA Publishers and Developers to abandon consoles and go back to being PC only.
But that certainly doesn't help the PS3.
Regards,
SB