This is going to fail so hard... not because the idea sucks, but, because it's too far ahead. No one wants to:
-Buy games that are saved on a server, so, no internet, no games, or if you get banned, or cancel your subscription, no games; wasted money.
-I'm pretty sure this will put massive strains on people's internet connections. Like someone said 114 hours per month if not used for anything besides gaming. What problems will come up if someone's trying to use the internet at the same time as you (router). And who's really going to use their internet solely for on-live? The people who don't already have internet?...
-The games being offered by the service are not going to be welcomed... Who wants to play mirror's edge... I bet if someone does, they already have it....
-No Uncharted, No Mario, Twisted Metal, Halo, Jumping Flash!, or Zelda... See that? Where's the console specific games? Everything's 3rd party support only? The same 3rd party games that are ON PS3, or Wii (or 360).
-How much will it cost.
-Awkward buttons on the controller. Fighting games will never work on that thing, and we all know how much we hate the 360's d-pad, and this thing makes an imitation that's just as bad.
I don't think I'd ever be willing to pay for something like this... First, we get DL only games from PSN, now we're getting game unlocks for games not locally downloaded? What's next? Server-accessed-Pay-Per-Play? Well, it'll destroy pirates, at least... wait a second, Sony already knows how to deal with pirates..
Guys, please, stick to your Sony, Microsoft, Nintendo, and Zeebo game consoles... Or they will fail. And when that happens, I'll put down my controller for good. I want to access what is CLAIMED to be mine whenever I want.. Don't tell me I own something that hundreds of miles away on some remote server, which is shared by everyone who donated 15 bucks to the service to unlock the game.
All games already have a slight bit of lag when played online, even if it's only noticeable by pros.. Any professional fighting game player will tell you that. You just have to time your still a little differently, and get used to the slight button lag, and you'll be fine, but, simply because your button inputs have farther to go (to the server hundreds of miles away vs. your home console) will cause lag, again, even if it's not noticed by everyone, it is there.
In Marvel Vs. Capcom 1, at least, I can feel a difference when I play online vs. local, even though I'm not a cheap War Machine spammer.
http://www.youtube.com/watch?v=ZAJ410q3aX8
Something like that would never be possible to do online, because, like I said, the timing would be a bit off.