Sony is set to acquire Gaikai, a cloud-based gaming provider, for what I consider to be a large sum of money. It's enough ($380 million) to signify Sony's investment in cloud-based gaming as a viable future option.
On-Live, among other cloud gaming services, is also rumored to be up for sale and with Sony's move, might happen sooner than later.
What does this mean for the future of console gaming? Well, we still have a ways to go with available bandwidth but from what I understand, cloud-based gaming has made steady improvements since it's inception. Biggest issue is latency and On-Live users (sorry, don't know any other cloud-based gaming users), tell me that button lag is often times noticeable.
That being said, bandwidth and internet offerings/price should only improve with time, so cloud-based gaming might be viable and maybe even fully comparable within a few short years.