Is OnLive The Next Step?

Earlier today OnLive was announced at GDC. For those of you who missed the announcement, OnLive has set out with a pretty original approach to covering all of the bases as far as multi-platform gaming is concerned. The system works by having either an application on your PC or a set top box in which you choose which games you want to play on. The games will be made available to you on day of release, just as they currently are by providers who make direct to drive games, but here's where things get interesting. Rather than downloading the game to keep, the game is merely streamed to you as you play. So rather than risk any piracy from downloading or have any physical media that can be copied, the games are on the other side of the world, but being transmitted to your TV or PC. And in HD, depending on your internet connection. Basically, because the service is streamed, you're able to play demanding games that would require you to own either a high end PC or current generation console, on your old laptop or TV. It sounds like a great idea.

All the talk from those speculating about the next generation of consoles being free from any need for physical media and relying solely on downloaded media, seems to have been justified, just not in the sense that many probably imagined. From the what has been said, the system seems pretty solid, but whether or not the system will work will have to be seen to be proven. Can the company honestly promise no lag if hundreds of gamers are streaming the same game at the same time? Will the controls feel quite as responsive if the signal from your control input has to travel over an internet connection? Only once the service becomes available will it be possible to answer these questions.

For now, the big question that enters my head is, am I ready to give up my physical media for this. So far there's no controller for the set top box, which to me makes it seem unfinished, because as per usual, I prefer to have official peripherals rather than spinning the wheel of chance on third party ones. I'm once again a bit on the fence here. A part of me wants to get excited about this, a machine that could truly change the dynamics of the gaming industry. But a part of me knows that this could just as easily be the next 3DO and be destined to flop. Don't know about you, but I'm excited to see how this one pans out.

UPDATE

It turns out that I was premature in questioning the existence of the controller, here it is complete with the set top box: