I do believe Smed is misinterpreting some things here. SWTOR had nearly half a million pre-orders in North America alone before they even announced a release date. If you *know* that people are going to clamor to be able to play your game, charging them $50 up front and a monthly subscription is just good business sense. Obviously there isn't a huge number of games like this. But I would be really, really surprised if Blizzard's Titan would launch as Free2Play. It is exactly the "large scale MMO" games which will remain monthly subscription in the future.
Thus the only conclusion that I can draw from his statement is that John Smedley believes that the future games of SOE will not have that sort of critical size to support a monthly subscription business model. Expect any future SOE games to be Free2Play right from the start. Which might not be such a bad thing, I do think that designing games to be Free2Play from the start leads to better results than releasing them as monthly subscription and then switching to a different business model after a year.