It is not really all that baffling. If you rent from redbox it is $2/day. While the 4 hour rental from PSNow is higher, the week rental is lower. $10 vs $14 (red box); If you wanted to rent a game for a month from redbox you would be paying more than the entire cost of the game. ($56) not to mention if you wanted it for 3 months. Lots of people are renting from redbox so I don't really see the issue.
Get this fucking logic outta here. This is not the place for that!
Seriously though, here are my thoughts.
1. The 4 hour option is obviously if you have a party, or friends over, and just want to get something and play quick and easy. There is no downloading, no queues, no "sorry, this game is not in stock".
Having said that, either the price is too high, or the time is too low. One of those has to change. My opinion, I would lower the cost a bit. I think Sony is afraid that if they up the hours, people might be able to finish the Single player campaign in that amount of time.
2. The subscription model will never happen. You think pubs will like it that someone can effectively play $700 worth of games for $10? Sony needs to balance between making consumers and making pubs happy. The a la carte option makes the most sense.
3. The price structure, as it stands now, is pretty good. The 4 hour option is dumb, but the prices for 7 and 30 days are reasonable. The 90 days is a bit overkill imo. At that point, people just see the price and think "well, I can just buy the game at that price!". Also, I feel there should be something between 7 and 30 days. Too big of a gap between the two. Scrap the 90, have the largest be 30 days, and put more options in between.
4. Some of the games are super old, and the prices should be adjusted accordingly. If you can effectively buy the game for the same price as the 30 day option, you have already fucked up.
5. This service NEEDS PS1 and PS2 games. Honestly, fuck PS3 games. I can still buy those with not much hassle and at good prices. You start adding Suikoden II, Valkyrie Profile, Lunar Silver Star Story, then you got a fucking service! Just add the entire PS1 and PS2 back catalog. The hardware its running on should no longer be a problem. Plus those games seem ripe for streaming. Not very graphic intensive. Ohh, and
add trophy support for them!!
Anyways, those are my thoughts. I've used the service on a 25/2 connection. It works beautifully. There is a extremely tiny delay, but honestly, you have to be really picky to notice it. Having said that, I wouldn't play a fighting game on it.