While the games run at 60fps server side, that doesn't mean they have to on the client side, where they video stream could be 30fps (and I think it currently is). You need 33ms latency to make response time within a 30fps frame (that's 16ms one way). Encoding at 1ms latency exists already as far as I know, so that's possible too. Note that the controller can send data at a much higher rate and separate from the video stream. Also I think you can predict some of the controller input intelligently to hide lag more. If the server is close enough (and you need to distribute them across the country to make this work anyway).
I still think this is going to work, at least on a technical level - at the very least for a (n ever increasing) subset of games. On a commercial level I'm less certain, but I'm sure we'll find out.
I still think this is going to work, at least on a technical level - at the very least for a (n ever increasing) subset of games. On a commercial level I'm less certain, but I'm sure we'll find out.