Well, apparently so, but there's a catch. TechCrunch broke the story, and has been following its developments. It started with the posting of an impressive video of a cityscape, apparently running on the OTOY server-side rendering technology, meaning that really fancy graphics can be displayed on... well, pretty much anything down to mobile phones. And that video's beneath the cut, along with a few thoughts on the implications from RPS' most tech-illiterate - and, in fact, generally illiterate - member.
This tech apparently works in any browser, without a plug-in. The basic idea is - as the server-side name may suggest - rather than the work to create a world being done on your computer, it's done the computers running the virtual world. Your responses to the world are sent back, the computer outputs the image, and lobs it at you. Since your computer's doing relatively little work, it doesn't need anything other than the ability to display the colour image.
The immediate question would be lag. They claim that, working on west coast america, OTOY have got 12-17 milliseconds on the west coast where their test server is, and 100ms in Japan, presumably plus any latency of your own connection. While this may be insufficient for an action game - though Jim points out Quake is playable on pings of 120ms or so - there's all sorts of games where it'd be absolutely fine. What LivePlace seems to be would be a good example - a post-Second Life interactive virtual world thing.
The second head-scratcher would be the actual set up. Sure, you don't need the PC power to do the work, but the people who you're buying the service from need to. In other words, there needs to the the equivalent rendering power to create the image for each person on a server. So, say, for a online world with 200,000 people working at any time, you'd need a server stack of 200,000 computers. That's an over-literal take, of course, but it's still an incredible amount of computing power. How much would this actually cost?
But really, the most interesting thing about this is the questions it raises. It's towards a future where a game system is more like renting water, or cable television. All you have is a device to show the images which are provided to you. Is this something which appeals to current gamers? Would they be talked around by it? After all, if people have problems with Steam being down and not being able to play games, this has the potential to be far worse. Conversely, the idea of never having to worry about your graphics card being enough to handle the future equivalent of Crysis ever again is certainly a major plus.
If ever a story needed to be ended with a "Hmm" it's this one.