“Free” TV and “free” radio are subsidized by advertising. You want your games to be interrupted with commercials in between levels? To be precise, radio stations pay metered “subscription” fees to the content providers.
Free online games are subsidized by ads too. Well, are if they can MAKE any money from Internet ads. And the vast majority of them are therefore either loss leaders (in the case of packaged game online play), casual games (cheap to make), or amateur.
As to when–who knows. No time soon, that’s for sure. The main pressure is the fact that games are easily copied and easily distributed, and it’s going to be easier. Digital intellectual property is in a bad way, and it’s going to get worse, that’s all. The last refuge for monetizing it is to store the valuable parts on a secure server, and sell a valueless thin client front end. Radio is showing glimmerings of going subscription, it’s rampant among the video/film industry, with examples ranging from pay per view to the sneakernet version called Blockbuster (regular movie renters are paying MORE than they would for cable!).
As far as getting 47 games for $40 a month–that’ll happen too. Watch for it, particularly as the current subscription MMOs start fading and move to niche audiences. Bundle packages will emerge, I’m sure. Three games for the fee is an intermediate step.
What game company spends as much as HBO on content? Well, it’s a bad analogue, since HBO recycles content whose development is already paid for, but take an MMO company that makes say $1 million a month. They are almost certainly putting at least a quarter of it back into the content in various fashions including customer service, staffing for ongoing content generation, etc. That’s not peanuts.