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pezus said:

They could just turn One into a streaming service. That wouldn't be "ze Cloud" enhancing its graphics, though. My calculator can stream OnLive, for example

If you checked out Nvidia's demonstration of it, that's essentially what happens.  The pre-rendered content is sent back to the console as H.264 video stream, and in real-time, on-the-fly broken into frames and integrated into the game video output.