Aren't most online games very simple in data, just sending what player is where? Positions and rotations. Actually calculating the game online means far more data needs to be sent, I think, like sending transformed vertices from a skeleton-mapped mesh. Take something like Battlefield's destructive environments - if calculated on the server, the server will have to send copies of the new meshes and textures of the newly created object fragments before it can send updated position and orientation vectors for each piece. The moment we start calculating the whole game on the server, we have to stream complete assets to the client. Gaikai only manages this by lossy compression.
I wasn't suggesting sending transformed meshes.
Just deferring the bulk of the none graphics work to the cloud. Increasing local resources for graphics.
Also many compression mechanisms can be applied here, quantization, interpolation, etc.
Games do not spend the bulk of their time submitting meshes.
Also, if you're still rendering locally, you're going to need the GPU and RAM and bandwidth, and that's the major cost of the console, bringing into question the value of shifting a small percentage of the work to the cloud instead of keeping the performance and convenience of local processing.
But you still end up with more, it's pointless to compare local processing to remote processing, because you have both. Doing anything remotely reduces the local cost even if it's more expensive or less convenient to do it remotely.
Seems to me that server-based gaming by streaming video is quite a different kettle of fish to server-assisted local gaming. The option to lossily compress user data means the issues of network connections are much reduced. The concept of server game processing is something akin to taking the CPU out of your PC and putting it on the internet, replacing those PCI-E connections with a broadband internet connection. Gaikai on the other hand is putting the whole PC on the internet and connecting just the display out to your monitor over a broadband connection.
Not saying they are the same, it was more a mental excercise, just pointing out to people concerned about the latency just how much could be moved to the server.
And FWIW I have actually shipped a game where in multiplayer mode, the client had a better experience than the server, because of the reduced CPU load.
I'd be tempted to try it, it's mostly the same work you'd do for multiplayer anyway, though working in two environments would suck. Obviously you'd make player state local in any real system to avoid the input latency.
There is obviously a limit to how much graphical improvement you can get out of something like this. You still have to draw and shade things. But you could probably improve animation, and almost certainly physics.
The question becomes is graphics the place we'll see the bulk of the improvement in games?