It's possible to transfer very high resolutions already with an average bandwith of today. They're talking about HD resolutions, whatever they mean exactly by that, but that basically means that it's already enough today.
And that's just going go get better. Especially because now internet providers have another reason to upgrade their infrastructure.

So the problem won't be the amount of data transfered, but how fast the response time of the servers is going to be. That's something that can only be made faster by having the servers closer to your home, or slightly by upgrading the wires.

As for the engines. Are they even going to make as big a difference as they do today?
My guess is that they will not visually, but there will still be a hand full of different engines, because it's also about the service and the tools that they come with.

It will be interesting to see how Microsoft, Sony and Nintendo are going to response to this. They could come up with something similar, I think they have to if they want to stay in the business.
Something like a console that can do both, run casual games by itself and stream high-end graphics from servers.