Remember that playing a game in the cloud actually requires more bandwidth than watching iPlayer. You are also likely to play games for a lot longer than the average person would watch streaming video. So the gaming broadband package will need to be fast, and unlimited.

However, there will be a relatively small number of servers (compared to the entire internet) so it will be easier to beef up the network on just those routes. Big game networks are likely to develop local nodes too, so international traffic will be reduced with all streaming video created more locally. It's the international traffic that costs BT the most per byte, and it will be necessary to reduce latency.

Well since I do not play online games I was not aware of that.

Cloud gaming is just like watching a high quality streaming video, except that you control it.

On-line gaming is different because the video is generate locally, although some games still use a lot of bandwidth and there's frequently updates of over a GB.

That is probably where I was going wrong. I assumed that much of the data was generated locally and the only data being transferred would be location, speed and weapon carried etc. The graphics would be generated locally so not much data transfer would be needed. Though from what you are describing I can see that they would need really good connections especially if the games were connected to High definition TV's. With people playing games for hours then it would need very high capacity and higher performance than most users currently get. Though it would provide an incentive to invest in higher capacity to cover future developments.