I can't see it being hugely popular just yet. As it stands, many countries do not have fast enough internet connections for this. For those that do have these kind of internet connections, 1.4MBPS is common, but with that you can only play the games in low quality video compression. Stretched to full screen that is not going to look good.. like stretching a youtube video to full screen. No thankyou, almost unplayable for most people. And playing it in a tiny window doesn't sound appealing either.
For the few people who actually have a 5MBPS internet connection, what about bandwith? We're talking about 720p quality video here which you guys will be able to stream. My estimate for that is around 4GB of your download bandwith for around 2 hours of gametime. Only people on Unlimited download quotas (and i'm talking TRUE unlimited, not where it slows your internet down after you reach a certain quota) will be able to use this effectively.
For someone like myself in australia, 2MBPS internet connections are about the norm, but we have terrible download quotas and unlimited is virtually non-existant, so using this service would be completely out of the question.
But in the future, when the norm actually is 5MBPS unlimited broadband for the majority of people, yes, this really could work, and is a very exciting prospect, because it means you would not have to upgrade your PC ever again or ever buy another console. I am still skeptical, however.
Still, I would miss mods.