My personal opinion is that over the long term, the ideas behind cloud gaming will be the right direction for graphics/cpu intensive applications on the client. This model assumes a fast internet connection with low latency, but this is rapidly becoming a reality in many parts of the world.
A thin-client (or browser) would send commands to the server which would react and send images back. So there is no need to update your hardware, install or patch your application. It is good for the application developers too because it can reduce piracy.
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