i don't doubt that consoles will remain useful, but i think that services like this will satisfy a pretty legit niche for a vast swath of games that aren't really dependent on low latency input (i.e. puzzle/turn based/rpg/simulators/board game conversions) and that are often 'discovered' by people finding letsplays on youtube.
for some variety of mmorpgs, i can imagine devs being excited about the reduced surface area for cheating/exploits. for somebody like me that uses a mac, i'm looking forward to playing a version of Civ that doesn't cause my laptop to sound like it's about ready to take flight. i don't think the idea is meant to replace consoles, though more, it seems like a way to grease the wheels of commerce and get people playing (and buying) games that they've been traditionally priced out of because of the not-insignificant startup cost of building and maintaining a gaming pc/console.