I'm not a huge fan of the NBN but I would say that if Australia had one of the most advanced FTTH internet capabilties in the world, this would work in our favour in terms of companies deciding to put server infrastructure in Australia for cloud based games.
The biggest financial barrier to deploying such a service Down Under would be concern about uptake - if they can make the same money per user here as in the US, then of course it is a viable business. Right now, as Australia's internet stands, there's a small percentage of the population that would have the required bandwidth to handle such a service that it would be financially unpalatable. If the NBN is rolled out, the number of potential customers to such a service increases exponentially.
I'm not sure why people are freaking out about this. It won't suit everyone. Competitive PC FPS will not be suited to this system, for example. You might be able to cope with a 30ms ping to server for an FPS whereas Netcode (more or less) evens out the advantage of people with lower pings in all sorts of automagical ways, but if the very fact you've moved the mouse is delayed in reaching the server, this could be all kinds of frustrating. But for MMOs, RPGs, racing car games, puzzle games, turn based strategy etc, the difference of a couple of miliseconds is not the difference between life and death. Of course, hardcore Starcraft users might disagree but they are free to keep playing it on their PC.
Someone called it in an article I read recently - this next generation of consoles will likely be the last if these cloud based services take off. Look at the current generation for evidence of the fact that the entire industry has lost momentum when it comes to pushing the technology envelope on games, due primarily to the fact they've reached the limits on what current hardware can handle. Imagine not being tied to such a constraint. If it's just a matter of throwing more GPUs into the rack. Suddenly it doesn't matter how much texture memory the 360 has, or whether your going to fit the uncompressed textures on a blu-ray disk for the PS3. Those limitations that 90% of the industry are working within because they're designing games for hardware that was released 6 years ago. (2006! Just looked that up - the PS3 was released in 2006! Yikes)
Pros -
* (For the developer) No need to worry about what hardware is in a user's living room, beyond that of a cheap "player" - Heck, I'll bet $100 that Sony start building the Gaikai player technology into their smart TVs within the next 2 years. This all equals higher potential market for sales.
* (For the user) No need for expensive consoles that are outdated ever generation
* Subscription-based models that mean you only pay for what you play. Seeing how many of us have games on Steam we've never played by paid money for, this model might actually save you more money than you first think
* Play your game in the living room on your TV (via a "player" or smart tv), on your PC, your tablet, your laptop...If it's got internet and a compatible software player, you can run it.
* Play your games anywhere that has a player. IE, check into a hotel, sign in on their smart TV and play your games there.
Cons -
* Internet connection required to play
Note - No, this is NOT "always-on DRM", any more than Netflicks or Gmail is "always-on DRM". It's an internet-based service. If you don't have the internet, you don't get the service. Given that you log in to access your games via your own secure account and stream game content without installing the game, there will be zero reason to install ANY DRM client software on your box. If you are militantly against invasive DRM software, rootkits and the like, cloud based gaming services should be the most awesome thing you've ever heard of.* Not going to work for all game types (not sure anyone has actually claimed it will replace physical or digital distribution as some seem to be assuming it will)
* Subscription-based pay-as-you-play models will end up costing hard core gamers more money. (This is in no way certain. For example, the current model for game pricing could be described as "gamers pay $60-$90 for unlimited play time). There is no reason that a cap couldn't be put on how much you pay for games. If it is not worth paying for these games, people won't. At the end of the day, the market will determine the value.
* "YouTube image quality" - Strange statement. Quality will obviously be dependant on your connection speed. No Nobel prizes for figuring that out. But if you're on a decent speed internet connection, there's no reason that the compression can't be scaled back to give you excellent looking video output. Effectively, your internet connection speed becomes one of the few "minimum requirements" you need to worry about meeting. If you value image quality and have a 4Mb ADSL connection, cloud based gaming is not for you. If you have a FTTH NBN connection - 1080P, low compression, high framerate video can be yours.
* "High bandwidth usage" - Ok, yes, this is a "con". But with 200GB per month plans now common, is this really even an issue? If it is, the money you would save on buying hardware to play games would be placed into paying an extra $10 - $20 a month on your ISP bill to give you higher bandwidth and you'd still have plenty of money left over in the kitty.
* Threat of games being pulled after a few years - this is one of the few concerns that I would say is actually valid. I would point out that haters have said the same thing about Steam since its release. It does require a clarified policy from the service provider so you know what to expect - they can't just be pulling games off whenever they feel like it without fair warning etc. But at the end of the day, you are subscribing to a service. It may piss you off, but people are right in complaining that you will not "own the games" you pay money to play. You are mearly renting time on the server infrastructure to play them. If you want to own the game, stick with convention sales channels.
* Latency - Purely distance based. No software solution can ever solve this problem, only "hide" it better from the user. No, you won't get a good experience playing any of these games on US servers. If this is going to work, we'll need at the very least Asia/Pacific based servers.
