The laws of physics add about 4.8 ms for every 1000 km of glass fibre (light travels about 31% slower through fibre optics) or adds 9.7 ms to ping time per 1000 km. Of course that's the maximum speed on the backbone. The number of hops the signal has to go through to get into your house adds a lot more.

You can test it yourself with Azure http://www.azurespeed.com/
While playing you will have a more stable connection of course, this is just a ping test.
Anyway far above the laws of physics as the nearest server is only 100 km away from me at 50 ms average.

The better the encoding the more expensive the hardware to encode and decode. Yet those will keep getting cheaper over time. When blu-ray came out you pretty much needed most of the ps3 capabilities to decode h.264. The main cost of early blu-ray players was the power needed for decoding. Nowadays h.265 is in newer phones so decoding should be fine. Efficient real time hardware encoding still asks quite a few resources though. And that while people are getting used to 4K60 on their new 65" HDR tvs. My laptop can't handle 4K60 you tube :/ It will be 1080p60 at most I guess. Aiming for 10mbps is decent quality 1080p60.

Streaming will literally lag behind local hardware for quite a while, perhaps indefinitely and we'll reach a point where people won't care about pristine quality and lag free gaming anymore over convenience. Just as Netflix has killed the video store, game streaming could accomplish the same and buying games could become a niche.

I wonder how prices will stabilize for streaming. Netflix went up quite a bit from the early days and has currently 3 tiers for different quality streaming and number of simultaneous clients. The same could happen for games, extra for fast action games, newer games, higher resolution. Commercials in the stream for cheaper subscriptions. Time limited / unlimited. So many possibilities to make money for service providers. That $10 console fee Sony and MS currently get for 3rd party games is nothing compared to that!

Remember the VR hype by the media? And now we're all forced to play VR exclusively.

VR was always an uphill battle given the price of the hardware. I can buy a big ass TV for a lot less than a VR headset. Also, the lack of notable content isn't helping VR.

Streaming on the other hand is more accessible given it could just uses a device most people currently own. Like a mobile device, PC, etc.

After 5 years or so PS Now is only available in 16 countries, i find it hard to take them seriously when they can't even make in available in countries where there are no infrastructural reason for lack of support

Probably because the cloud already exists, it has many pros but also may cons, the worst of which for gaming, lag, can't be solved as local will always have a lag several orders of magnitude lower, and because any statement about MS INVENTING the cloud is pure and unadulterated PR BS, btw not only MS didn't invent it, but also MS own cloud is largely based on Linux and Unix servers.
About Google world, cloud is largely used by many Android apps, including multiplayer games, but only a few very efficient ones manage to make the lag not annoying, still moments of horrible lag happen every now and then playing them too.
But essentially, as good as MS implementation could become, there's obviously no reason for Sony to be in discussions about it. Sony can surely better its own cloud, but even in its most arrogant moments it won't do such a ridiculous thing as claiming to have invented it, if they want, they'll better be involved in less unbelievable discussions, articles and PR.

Data centers and coverage - both MS and Google have a lot of them. As in crapload of them.

I can't remember exactly which one of those two, but I think it's Google's Project Stream that is calculating some things in advance to reduce latency - no idea how that actually works.

I've heard about the whole predicted AI too. I don't quite get this as a function for games. Are they really trying to advertise computers making moves for us before we have even decided it because they suspect that is what we will do?! So at that point a computer is playing the game for us.

Do you want The Matrix/Skynet? Because this is how you get it.

Great post, obviously te reason everyone is talking streaming is the success of Netflix and Spotify.  For my 2 cents, I am becoming disillusioned with streaming, as more and more video services split a finite number of movies among them...will I pay for a Disney service, or will it simpky decrease the value of Netflix for me? Also, why can't I get a single James Bond movie on Netflix?  I am curious to see what this does to  Netflix in the next 2 years.

PlayStation Vue costs more money and has less channels than my Hulu with Live TV package.  No thanks.

Indeed, we kind of had it all for video after the format war was settled. One box plays all. No matter where you get the movie or tv show, you can watch it. Now we already have Netflix, Amazon video, Hulu, CBS all access, Disney, HBO Go, Playstation Vue and more popping up. At least I can still buy Westworld season 2 on blu-ray at some point and play it on any blu-ray player.

Games were already fragmented between platforms and no doubt at some point we'll get, and already have, exclusives or originals / early access for Game pass, EA Access, PSN, Nintendo online and what ever other subscription services will pop up. With game services it's going to be more complicated with which devices support which services. Just as more and more games become multi platform with the end of 3rd party exclusives, we're about to open a whole new can of worms.