But, to be fair you're right in that we still haven't figured out the best way to pay shorter games. Right now, the upside for them is more distribution. About the new launchers thing, it's a tricky problem to work around. We've thought about just using a website, but you run into issues with DRM implementation.
Some indie games I've really enjoyed back in the day for the story were ones like What Remains of Edith Finch and Binding of Isaac. I'm certainly not playing them for more than a few days. On the other hand, indie games that I would replay, like Terraria and Stardew Valley, are already making significant revenue through the current Steam model. In fact, many of their current players would have been dismayed by a subscription model, which would have led them to not enjoy that much of a fan base.
> we're able to pay developers a recurring revenue stream, as long as people are playing their game.
That's how normal game sales already work for non-replayable games.
Good indie games are usually more like $20. If you want to be in this service and make the same amount of money, you'd need your existing player count to only play your game for over 2 months, assuming the revenue split is the same (which you've left out). This is unrealistic; I'd expect people to play 2 or so games per month. Your service would need to make that up through a massive increase in advertising. This is already what publishers do, so you probably won't get any Annapurna/Devolver/THQ/etc games. Basically, you're trying to do what Epic did (make a new platform and subsidize dozens of games) without making a billion from vbucks.
> This way, indie games can achieve profitability with a smaller player base
Your service doesn't encourage this. People are going to be less likely to stick with a game, so you need more players to get the same revenue, assuming all else is balanced.
From the player side, people irrationally hate installing new launchers. The DRM thing is probably fine though. It'll depend on how often it breaks games and how much performance it takes.
My conclusion is this is Moviepass for games. Except it only has 11 games.