It's not just an idea anymore, they actually did it!
Imagine how this will change the industry. Maybe not in it's first year, but eventually.
It's hard to just wrap your head around the possibilities...

San Francisco, CA - March 24, 2009, 7:16PM - OnLive, Inc., the pioneer of the on demand era of video games, today emerged from seven years of stealth development within the Rearden incubator to unveil The OnLive Game Service and OnLive MicroConsole™ at the 2009 Game Developers Conference. OnLive is a revolutionary, on demand video game platform delivering the latest and most advanced games instantly, on any TV via a sleek, inexpensive MicroConsole, or on almost any PC or Mac. OnLive is supported by many of the top names in the video games industry including Electronic Arts, Ubisoft, Take-Two Interactive Software, Warner Bros. Interactive Entertainment, THQ Inc., Epic Games, Eidos, Atari Interactive and Codemasters.

I think this simplifies the whole gaming industry, from developer to consumer and can attract a lot of new consumers.
It looks like they've gotten over the biggest issues they were faced with, such as lagging and running it on every pc and on mac and even on a plain TV, if you own their (very small) console.
They're focusing on the north-american market as a start, so we here in Europe will have to wait for them to build the server infrastructure. After that, your low-end laptop will do just fine as your main gaming device. Or you just move over to your TV or Beamer and you have exactly the same service.

It's all on their newly launched website and there's a presentation from GDC on Gamespot.

www.onlive.com
http://www.gamespot.com/shows/on-the-spot/?series=on-the-spot&event=on_the_spot20090324

I'm wondering what this means for future advancements in graphics and for game engines.
So far they're running games that have been developed for PC or Console, but when developers start to create games for this service specifically we will get much closer to prerendered quality as you see in feature films today.