That dystopian future will happen whether all piracy was to stop this moment or not. Content creators want control, and for some reason governments want to readily give them this control*. Games industry is a bit of a bitch with the DRM, but generally they've actually been pretty placid on the legal front unlike MPAA, BFI, RIAA, IFPI and their international counterparts. A large chunk of the powers given to media groups also tends to circumvent "innocent until proven guilty" which is a load of balls, especially given the exceedingly shakey evidence of IP addresses usually given.
Streaming for all media does seem to be the way to go, it provides benefits to both consumer and producer. Consumer gets a easily accessed mountain of content for a reasonable cost, and producer has a fair chance that consumers will sign up for this. But it means both sides ceding control to these new companies like Netflix, OnLive Spotify, etc. Something we're seeing content producers revolting against in US with Netflix n Hulu(and even giving net neutrality the finger in order to push their own services). The main part against it all though is it locks out countries and regions where the net isn't as speedy or accessible. My gran can't really buy films from Netflix to watch on her DVD player.
But as long as disc formats still exist, as long as user accesible PCs exist, then so will non-streaming, un-controlled distribution of content and games.
*http://www.techdirt.com/articles/20120625/12333619468/eu-commissioner-reveals-he-will-simply-ignore-any-rejection-acta-european-parliament-next-week.shtml