We already have a netflix like system for games, it's called the Steam sale. When you can pick up a $60 game for $5 a few months after its initial release I'd say that's a pretty good reason not to pirate. That said, most people only avoid pirating video games because they want to play on the multiplayer servers which is usually impossible with a pirated copy. On consoles piracy is alive and well provided the console has an easy modification or way around using official discs.
Take my Nintendo Wii for example; It's softmodded and has a 1TB HDD plugged up to it. I couldn't tell you how many games I have on the thing but it's well over 1,000. I have about 120+ Wii games, about 24 "downloadable" Wii games, and the rest are older games running through emulation. Some of these I bought or own in another format, most I pirated, most that I pirated I wouldn't have bought anyway and only keep around because I'm too lazy to delete them.
Do I feel bad about all of this? Not really. I don't have to get up to change discs and I have all my classic games ready to go at the press of a button. There were games I did buy just to support the company (Mega Man series comes to mind) but for the most part I don't care about having a disc or booklet anymore.
If you were talking about a streaming system for games this has been tried and will honestly never work. Network latency makes it impossible to play most games as intended if you're streaming them to a remote screen. Anything over a couple of milliseconds is simply unacceptable to the end user. At a high level of play 1-2ms can be the difference between winning and losing. The state of network latency right now is so bad that even a casual player notices the delay, and this problem isn't going to be fixed until we figure out how to send packets faster than the speed of light.
Piracy in general has never been something I considered out-right bad anyway. I've always been of the opinion that copyrights and patents hold back our progress as a species in the digital age where things can be copied over and over again without denying anyone access to their own copy. Patents/copyrights are relics from a time past when they were needed but now they are usually abused by people in a position to game the court system. I know a lot of arguments go against my line of thinking, and all of them boil down to money, which I feel is fast becoming a relic too.
I'm looking forward to the day when I can download a car, TV, laz-e-boy, and build my own gun in photoshop. 10-20 more years and all that will be reality (I can build the gun now, just can't afford the printer).