The internet is not going to be anywhere near fast enough in most of the world for cloud gaming to be much good for most people for many years yet, maybe even decades. Even the fastest consumer-grade connections have around 20ms latency, which is nowhere near responsive enough to game on. And most people do not have connections even that fast. There have been a few attempts, such as OnLive, but these have all ended in failure so far.
Also, think of this: assuming consoles were replaced with cloud gaming, and assuming at any one time you might have, say, one thousand people playing a game like Call of Duty (a big underestimate, most likely). That means the cloud server has to be able to run one thousand instances of Call of Duty, in parallel, at the same time, with no lag. Stop and think how much computing power would be required to achieve that. Do you think that's going to be economical any time soon?
Not to mention issues with downtime etc, much like the latest Simcity suffers.