Cloud services are only going to work best in CONJUNCTION with other solutions. Having a pure cloud service is an absolutely horrible idea.
Sure, it works reasonably well, even now in the infancy stages, when everything is up and running and working.
But ... have you ever tried to use Netflix streaming during peak hours? Or tried updating TF2 when there's a sale on steam? It's not fun. It's not reliable. The bandwidth is just not there yet ... and the service is a limited time only.
If you take the example of OnLive, it's a cool idea ... but you pay for limited time access to a title. (Those licenses won't last forever) The issue there is ... it's the same exact price.
If you want to go ... 10 years down the line ... hell even 3, There's absolutely no guarantee you'd ever be able to play that game again. That to me, is a very large problem.
The idea from the distributors point of view is, of course, they get more money than traditional distribution. But they want to give you less for your money so you have to spend more. They're pushing this digital revolution before the industry is ready for it. Shifting the retail model 1:1 to a digital model, is an entirely disastrous idea; people are going to be very sorry if they're too quick to embrace it before these regulations and proper systems are hacked out.
At least with a retro game cart. you can replace the battery so you don't lose the game content. ... If an online service goes down ... you're boned. If it's from the company going under ... which happens almost on a daily basis in the games industry ... you're S.O.L. And outside of that, there's draconian restrictions, currently that do silly things that mimic music distribution ... like tying the digital game to the hardware you bought it on. Yeah ... great idea
In general we need a more open approach to hardware, gaming, distribution, and software, before any of these systems could work better than a retail model. Not to mention the entire planet needs to increase internet infrastructure. (If you think the United State's internet infrastructure is ready for media to be even 20% distributed digitally, you should prepare for the biggest kick in the pants ever)
SheepCanon ... you can change the hard drive in a PS3 ... it doesn't void the warranty, it's made to do it. It takes a 2.5" Sata HDD. You can transfer everything over through various utilities too. RTFM.