There are so many good and bad issues with this. I think it was posted on TFP before a long time ago by cybermike if I remember correctly.
1. Hardware would never be outdated for players. If better graphics or better framerates are available, they would be applied to the server, and users would get it instantly since it's streaming.
2. We would begin buying games that didn't really belong to us since it's all streamed to you.
3. I personally don't think any amount of upload bandwidth is capable of delivering a seamless experience in this situation. Think about it -- right now, your local PC or console is registering your movements, your aiming, your button presses, and then it is interpreted on a server if you're playing multiplayer. If this system were to work, every single motion or input you do while playing, even on single player games, goes through an Internet connection back to their server. So lag would be possible even in single player games *shudder*.
4. Part of the fun for PC gamers IS being able to say I have a better framerate, better graphics, a better experience than you, because my PC is awesome. Same reason some people like fast cars. This system would remove that fun.
5. Since there is no game installation or downloading or patching, the experience would theoretically be much less annoying and stressful and less prone to errors and crashes.
6. If the connection were to ever go down, you wouldn't be able to play even your single player games, even if you owned them.
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"A Darwinian attacks his theory, seeking to find flaws. An ID believer defends his theory, seeking to conceal flaws." -Roger Ebert
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