If you're comparing game streaming to consoles, then the fair comparison is to every other source of video entertainment that predates YouTube. Like: DVD, VHS, network TV, cable TV, bootlegs, etc. They had EVERY alternative to compete with, and almost all of them were better in some way or another. YouTube was (and is) simply better in ways that matter even more.
That being said, maybe latency will never improve. Maybe no matter how much pipe you have, the fundamental speed limit of light is enough to ruin this whole concept for gaming. Maybe.
But I doubt it, personally. I'm willing to bet that this is an idea that simply needs technology to catch up to it.