It's bad. It's bad bad bad.
For one thing, whether we like it or not, the tabletop RPG market seems (to me) to follow its own variation of hegemonic stability
, where the single largest game (i.e. D&D) either buoys the entire market, or sinks it. I know that a lot of people like to look at historical instances of other games (possibly) surpassing D&D, such as Pathfinder briefly eclipsing 4E or White Wolf's World of Darkness products reaching their peak in the late 90s, but in both cases these were D&D faltering so badly that they fell below thresholds met by those other RPGs rather than those other games truly surpassing D&D.
Maybe it's not fair, but the reality is that as D&D goes, so goes this particular niche market; if it falls, the entire thing becomes small, highly balkanized islands of games which might meet the lowered expectations of their individual publishers, but won't ever represent any sort of major influencer.
So yeah, given that this is a self-inflicted wound to D&D, this is bad for the RPG market as a whole.
That's without getting into the idea that it's bad because there's a lot of games which are based off of the 3.5 SRD which are going to take a massive hit in terms of third-party support. I don't see WotC putting the 3.5 SRD under Paizo's ORC License, I don't think they'll release it (or at least, not much of it) under Creative Commons, and even if they do release it under the OGL v1.2, I don't expect any publisher in their right mind to sign that agreement. So that means that publishers who made PF1 content, Mutants & Masterminds content, OSR content, etc. won't be able to continue supporting those games. As a fan of those games, I find that to be a loss with no upside to it.
It's also a bad thing because if D&D turns into the VTT experience that Chris Cao wants, it's going to influence how newcomers play the game, by which I mean that if you start playing D&D in a quasi-video game environment, you'll think about it in those same constrained parameters. The entire idea of "you can try to do anything" will contract to "you can try and do what the computerized environment allows for." Outside of the box thinking is now measured in terms of what the DM can force the system to handle, rather than "rulings, not rules," which compromises on one of the most central aspects of what makes tabletop RPGs different, unique, and special.
I know that some people think that a post-OGL community will lead to some upswing in creativity, as new systems are invented. I don't think that'll be the case, but even if it is, I don't think it'll ameliorate the above points enough to make this seem like a beneficial turn of events.