Anyone who thinks the next generation of consoles won't require a permanent online connection for certain AAA title games to run is in denial. Publishers have been waiting for this day for years; the day where they can completely control the customer's access to their game. Kids who grew up with the Xbox are already conditioned to pay a fee to access online at all (on top of normal ISP fees). Now they're being conditioned that it's normal to pay $10-15 for 1-2 hour long DLC packs. It's only a short jump to requiring online access to play at all. How long from there until games start to 'expire' after a year or so? EA already does this with their sports titles by cutting off last years multiplayer servers every time a new version comes out. This is reality, it's not just me spouting tinfoil hat material.
I completely agree that Ubisoft needs to leave the PC game industry. A message needs to be sent to the big publishers that PC gamers are not interested in such a restrictive DRM system, and never will be. If this results in less AAA big-budget PC games, so be it. Smaller developers will be more than happy to step in once the big publishers move entirely to consoles.
A permanent online connection is unnecessary at this point. Until someone can mod the PS3 to play burned games, Sony already has the current anti-piracy console. Online only can be effective from a protection standpoint, but it also costs Sony money to maintain the servers. This would be above and beyond what they're already currently providing.
OnLive is moving towards the actual business model you're describing, but it's not really a console. It's actually the most logical next step: not even giving consumers the hardware, rendering piracy impossible. Luckily, I don't see OnLive getting off the ground at all. Not in the nxt 5 years, at least.
