With internet service the way it is right now, there is no way this can work for the mainstream. Not everyone has the bandwidth to support this. I think despite the tech and compression they use, lag will be a big problem. Not to mention, in some other countries, this would be impossible. (Australia for example. Shoddy internet service outside of major cities)
Also, 700mb an hour adds up quick. Plus, owning a physical copy of something is much more appeasing. I'd hate to see something like this change that. I'll always favor owning a physical game that I can stick onto a shelf and admire. 
Services like Steam are hugely popular though, so perhaps I'm in the minority there. I just see all of these services as less freedom, as weird as that sounds. :|
Person 1: Does Valkyria Chronicles have trophies?
Person 2: No.
Person 1: Forget it. I'm not buying it.
Person 2: Wait! It's amazing! Unique, charming, drop dead gorgeous... Hello?
