that's ignoring a few obvious and fatal flaws. the main owner of the game will boot any other player when he wants to play the game. A lot of titles are multiplayer, and with this system multiplayer games could actually sell more, since two of them would be it first and play against each other, then one players would borrow one of the copies and play against the other, and then he wants to play with them and so on, and voila 10 copies sold.
also that library of 121 games would be a good thing for the publishers. as an attach rate of 10 games per console is WAAAAY above average today.
I'm sure they could come to an agreement with SP games and some of the less popular MP ones. I grant you that there's no way around it if you want to play at the same time, but I don't know about everyone buying copies. My IRL friends rarely play the same games, but maybe that is just me. SP games would suffer a lot worse in this scenario, but maybe it would be worth it as an opt-in for each game.
My example was not really meant to portray the average, but a group that would milk the feature for all it's worth, where everybody (arbitrarily) buys a game for everybody. Tie ratio is what you're looking for and, apparently, is pretty close to 10.