We essentially have it already, the issue is latency over distance. OnLive was a fundamentally good idea, they got the latency down to 1ms for encode and decode of game video/audio/controller streams on a small and cheap piece of hardware.
The issues are:
1) Latency at a distance, streaming from a data center will never work as there is an inherent minimum latency involved over any given distance.
2) Bandwidth and data, for internet based apps streaming constantly for extended periods uses a lot of data, fine for someone like me on 120mbit fibre, but bad for a huge section of the population struggling on ADSL and over subscribed networks.
Inside the home it's a doddle, Nvidia shield will do it, steam box will allow streaming from your PC to a smaller living room device, over a LAN with no perceivable latency it's absolutely do-able although we currently lack a good array of options for it.