There are many physical problems right now - Massive clusters are needed to process the huge amount of data from thousands of users. Lags are a big problem for the gamers. Internet connections are a lot too slow (If i think of my 3Mbit connection ... ).

But some years in the future this might change. The computing problems will be solved by quantum processors, the internet connections will be unbeliebalby fast and completely free of lags by using physical entanglement. But we will have to wait about 10 to 15 years for these techs. So hold on and be patient