Microsoft set the groundwork for developers to make some really innovative stuff for Live and online gaming. imo, we're going to see some really great stuff that takes gaming to the next level. Live will get video chat (could be killer app if done right), texas hold-em, growing arcade library with old and new games, and more trailers and music downloads. I think Microsoft will eventually move into offering full movie downloads, hi-def music downloads, tv shows, internet calling w/ video, iptv DVR, and game downloads imo. I also think they'll eventually release different versions their own "xpod" with music , video, and even a gaming version.
Nintendo and Sony will follow suit and mimic alot of XBL features while bringing their own spin on things. Online play will be included in the vast majority of games and Nintendo will have the added bonus of offering their exclusive old-school Nintendo titles and making MMO games out of pokemon and mario. Sony has their huge entertainment division and the PSP to make some nice connectivity options (dvr, multimedia hub, PSP tv, etc.). Time is going to be an even harder commodity to come by in this coming generation.