My own silly analysis: monetisation can come at a later stage. Since the server is running on the customer's Window machine they won't have much infrastructure costs to support even if they get very popular. If the main product is free then revenue can be added through extensions like hosted service or parnership (eg: integration with Twich or another video game streaming service).
"Play games you already own using your own hardware for $0.00 for the next 1 year."
"We've noticed frame drops while you're playing Skyrim, click here to upgrade to a premium stream from a premium computer using your own cloud saves! (only $1.99/mo!)" ...or pay $1000 for a new video card.
"We've noticed you don't own Skyrim, click here to instantly start playing from our computers instead of your computer for $1.99/hour or $10/mo, or $100/mo for unlimited access to all games, etc, etc.!"
