With so many people in the industry saying that consoles will die soon (among which big players like Hideo Kojima and Gabe Newell), many of them believe consoles will be replaced by Digital services such as Steam and Xbox Live. It is already happening!

I think ISP's around the world (and especially up here in Canada) need to solve their bandwidth issues and loosen up on throttling before Gaming as an absolutely online service will take off. For example, I'm currently playing through the Half Life 2 series again but Episodes 1 and 2 require a total of 15 GB worth of updates combined at the moment. I only get 95 GB of DL UL bandwidth a month. I share my internet connection with 9 other people and we all use quite a bit. Every GB over the 95 GB is $1.50 extra. As it is we barely squeeze in 95 GB of usage a month. If I decide to update these two games I'll probably end up paying 15 GB * $1,5/GB = $22.50 extra just to play these games. That's more than the full price of these games. If I simply downloaded all the updates and mods for the games I wanted to play plus all the game trailers I want to watch I could easily push 50 GB a month alone for myself. 

So to answer your question, no... I wouldn't mind it going that way but at the moment the way internet policies are going I don't see it happening. 

You will still need some type of console at home to recieve the information. I do see the end of physical copies of games sometime in the next 3-4 game generations. I could also see console makers making console so similar to computers that you can buy their official brand, or a 3rd party, or build your own like a cpu. But that seems farther down the line.

No because suddenly the only people who can use them are the rich western world.

Eventually.

eventually they will,but not anytime soon.

lol, no silly!  They're going to be replaced by Nintendo 3DS. :)

It's only a matter of time. DD services have already killed PCs, so give it a few years and I'm sure they'll do the same for consoles.