Well, this seems interesting. At least in concept. Execution will be everything.
The whole "cycling out of the service" thing may be a deal breaker for me, but it'll depend on how quickly or often this happens. I do most of my gaming with a couple buddies of mine, playing online co-op games. We'll jointly decide which game we want to play next, buy it, and then play it until we finish it or lose interest. Then we pick a new game. We only play 6 hours per week, so it can take us months to get through (or just get tired of) some games. If a game got "cycled out" while we were in the middle of playing it, that would suck.
Hopefully the drop dead date for each game will be clearly indicated, several months in advance.
And of course, the library has to be good. Duh. The place-holder lists we've seen so far are not appealing to me at all. I'm either un-interested in the games, or I've already played them. I remain hopeful that the real list will contain some games I actually want to play.
Along those lines, I'm a little worried that limiting the service to "only" 100 games at a time may result in there only being a handful of games of actual interest to me and my friends. At that point, it'd probably be cheaper to just buy those select few games on Amazon.
It's interesting to realise that if I hadn't already spent thousands(!?) of dollars over the last 12 years, buying the 360 and XB1 games that looked good to me at the time, this service would be a no brainer! The entire selection would be new to me, and so cheap! I wonder if that's the real audience that MS is targeting with this service: People that are new to the Live ecosystem. Interesting concept.