At a recent presentation during GDC China, Microsoft’s Brian Price reiterated that the Xbox won’t be going cloud-based anytime soon; while he admitted that game streaming services are “the distant future” of the game industry, with future consoles eventually becoming similar to OnLive’s “console” (basically just a small computer powerful enough to run a streaming video codec,) but he went on to say that cloud based gaming still suffers from too many limitations to make it a viable, mainstream product in the current market.
According to Price, most Americans still don’t have access to internet connections that are fast enough to handle the extensive bandwidth drain that streaming gaming requires, and while he made sure to re-emphasize that the Xbox (and presumably the next Xbox, which is currently in development,) will stick to the tried-and-true methods of digital downloads and retail, physical distribution, he did tease that “cloud based features” would be coming to the 360 soon, and that an announcement regarding these new features would be made soon. It’s safe to assume that these new cloud features go beyond the cloud-based save games that already exist on PS3 and on PC’s via Steam, as Microsoft has already made an announcement regarding the addition of cloud-based saves for XBL Gold members.
By the time it becomes viable it will already be obsolete. Look at how much $1000 can get you in terms of a desktop computer now, $1000 and you can play just about anything in the high settings.