With the acquisition of ARM, Nvidia has CPUs and GPUs covered, just like AMD. Bidding for the next generation of consoles should be settled in about 5 years. That's just nice time for Nvidia to integrate its processes and produce a next-generation console. What do you think?
Will Nvidia be competing for the next generation of consoles?
Latency is still an issue.
Even then. There will have to be massive investments in infrastructure and switches, routers, and the like will have to be way faster. Think sub 1ms Ping times. Nvidia is now well-placed to develop those systems but implementing them is going to be a massive effort. I think your timescale is very optimistic.
What I do think will happen is that game data may be held on central servers and streamed out. So when a game loads a new level, it loads it from the cloud, not the local system, if it's not cached. This obviates the problem of games consuming more and more local space. Who cares if a game is 1TB in total if you only have 20 GB of it at a time on your system?