I think the hardware argument is moot either way - ultimately the quality of the gaming experience (in addition to other factors such as accessibility and marketing) will determine success. Sony is already including PS4 games on the PS Now service, a service which does not require a console (from a technical standpoint, as it's currently limited to PS3, PS4, and PC). The main drawback to gaming on PS Now is stream quality, input lag, and a limited library. But it's safe to say that in time these issues will go away as internet technology improves and Sony expands the library.
So, let's say that in 10 years streaming games is as good as playing them from a console (objectively speaking, people will still have their preferences), yet Sony also sells a console. Looking at sales performance as we do now, using a console's install base as a primary performance indicator, it would look like the console market was decling and on the verge of death. However, assuming that the PlayStation brand continues to be successful, you will see that revenues will be maintaining or growing. That's because, at the end of the day, it's the amount of money spent on content (full games, expansions, and DLC) that will matter. Yes, there is some profit to be made from hardware sales, but most of the money will come from content and services. And other performance indicators, like daily/monthly active users and average revenue per user will be come much more important than how many units were sold.
Pachter is right when he says the way we play games is going to change, but it's not a change that threatens the type of games you know and love today.
