Well, the nice thing about having your own copy of the media on your own machine is that if you lose access to the internet, you can at least still play locally.
My guess is, too, that while something like XBox Live has to exchange a lot of data with a server somewhere, it's probably a lot less than something like this server has to handle. Leaving the vast bulk of the processing work in the hands of a local CPU is always going to outperform a totally served up system.
All this does is remove the console from the equation. I got my boys their XBox 360 two Christmases ago for around $200. I pay a $5 a month subscription fee for XBox Live. My guess is that this other system, over two or more years, will not compete with the system my boys have on either a price or peformance basis.
BTW, I have a home cable internet connection that delivers, on a good day, 8 Mbps. Usually, around 6 Mbps. That's according to
www.speakeasy.net/speedtest/