The cloud (which is nothing more than a server) is the only way to store and distribute it for massive public use, but everything else you said is pretty blatantly not true.
1. You are massively over selling what is happening. Drivatar is just dynamic scripting, and after looking into it further than your now obviously taken from marketing bulletpoint explanations from your video, via straight out of the mouth of Turn 10 and through the filter of a computer science education, a pretty weak, offline (Not calculated/adaptive in real time) version compared to the online stuff I saw a decade ago... I vastly over estimated it in giving it the benefit of the doubt... But... it is just a racing game, so it doesnt need much, as its restricted by a very obvious and controlling rule set (Race to the finish). Its probably only stored and distributed by the cloud, the actual generated scripts are written immediately to recorded data, offline, but on console.
2. You need to read up on machine learning and hueristics before attempting to make these uneducated claims, you think you are pointing out two seperate things, and find some manner of vindication, but in reality, both these behaviors, making ai more 'humanlike' and 'simple ai adapting to human behavior', are both done with the same solution, hueristics. The things you are telling us to imagine in the future were done a decade ago, exactly as you described. Also the fact you are using fictional movies as some kind of point is... Very... very... bad. Very bad. It doesnt require vast amounts of power, (most) game designers are just incredibly behind the times when it comes to adaptive AI, probably because they ditched trying it because of the in order floating point heavy branch sucky processors of the ps360 (Hueristics, and most things important to a game engine and ai require good branch performance, and benefit massively from out of order execution). Some of the most advanced huerestics in videogames so far have actually come out on the least powerful systems. The wii actually has quite the slew of them.
The emergent behavior in a little kings story could grow to become quite the spectacle. Never the same twice. I still wish I had caught the great hippie genocide on video. Again, this is the same solution required for 'drivatars', hueristic machine learning, except exponentially more advanced in its capability to expand.
Dwarf fortress, both fortress and adventure mode makes anything you have talked about here a complete and absolute joke, and its... not online at all (Internet online, ai adaption taking place on the fly is also called online, and in that context, Dwarf fortresses AI IS online, or it adaptively calculates on the fly, whilst forza is offline, with scripts generated after reviewing a recording of player input), and controls the adaptive ai's of hundreds of thousands to millions of characters throughout tens of thousands of years of hueristic ai generated history and events.
This AI is neither new, nor does it require vast amounts of power. In fact, it was advancing by leaps and bounds in the early 2000's... By 2004 they had entered a live field test of a popular mmorpg, with a clan of hueristic adaptive ai, and it not only conquered standard ai, but adapted to consistantly and decisevly defeat the best human teams, including human specific 'tricks' and strategies, within 15-30 rounds, consistantly. It was so successful they had to devise a new hueristics system to scale it back when it became to advanced for human players.
And then mainstream progress on hueristic ai dropped off the face of the earth around 2005-6. Hrm... Wonder what happened in 2005/6....
Im sorry man, but you got caught by very well done marketing trying to hide the fact that ai has stagnated and atrophied for the past 8 years due to humans and not hardware (All at the hands of the 'Cinematic gaming AAAAAAAA experience!!!!!), and hyping up simplistic dynamic scriptings, hoping no one remembers that they were blown out of the water back in 2004. Marketing pulled the bag over your head.
The cloud is not required for drivatars ai at all. The new scripts can and in all liklihood 99.99% are calculated and compiled offline (Both not during a race, and not in the cloud) JUST like sim city and the massive lie about how it was calculated in the cloud, but,in fact, was not and is on the system, and simply uses the cloud as a convenient method of distribution. The cloud does nothing more for drivatars than the cloud Nintendo uses (Yes, Nintendo has da cloud, technically everyone does) for Mario kart 8, distributing ghosts.
While I find your immediate attempt to place yourself as above me in intelligence an intensely large red flag that says I should not waste my time arguing with you, I WILL point out that you may be in over your head.
Drivatars are EXACTLY dynamic scripting created through the use of human interaction with the program (Forza 5), and until you've experienced what I'm seeing firsthand, you are massively dismissing its worth in the world of AI in games that have long been filled with "dull" AI patterns. You're so busy trying to defy marketing to show your individual ability to perceive information that you are missing some of the actual positives and truth behind it.
Second, your use of Dwarf Fortress, while a good example, is an example of hive AI. It's a massive number of individual units given tasks to create the illusion of many individually intelligent entities, but they are all ultimately controlled by ONE SINGLE ENTITY: the program itself (the game). Find me a game in which each individual character is controlled by a highly sophisticated, concurrent running program. Oh right, you won't, because that requires supercomputing power, something outside the realm of the "home". Since the DF game world is also procedurally generated, it actually MATCHES the behavior of the cloud in many ways: take data in; compute; employ computed results around scripted boundaries. The many things you find so great about the AI in DF are actually rather simple, and given the game's primarily mathematic calculations (of which CPUs are fantastic at), DF is a great example of superior mathematics programming skills moreso than AI (which is also mathematics, mind you, as all programming is, despite the use of "language"-based programming to simplify its deployment).
DF, then, is a good and bad example: AI routines in large numbers controlled with reactionary behavior to the procedurally generated world; but it does not set itself apart from the concept of the "cloud" in any way. Everything that DF is doing can be offloaded to the cloud, leaving the CPU free to do more complex tasks on the local machine. This is the point you completely missed above, and I quote myself, "This cannot be done on a single local machine because the processing power required to create an AI that dynamically adapts on the spot to a single player is WAY beyond the power of a 6-core mobile CPU that is also running the system itself." In other words, with 6 cores already calculating complex physics, frame calculations, etc. there's almost no ROOM to create the AI that you so aptly want to remind me already exists (because I never said it DIDN'T already exist). What I clearly said was "AI in GAMING", and I am perhaps wary of your dismissal of marketing because you are already missing keywords from my own "presentation" on the matter. Sure, there are prototype AI tests. Sure, DF is deceptively complex, but you said it yourself: AI in gaming has been almost utterly crap. Drivatars are a HUGE step above the crap AI we've been experiencing. You'd believe it when some Drivatars purposely block and smash into you like their real life counterparts do (and I mean, that PERSON, as each Drivatar is customized AI to the driver's actual human behaviors), which is why I choose to drive defensively to not add to the Drivatars that are seriously racing trolls (inside turn cutting, pit maneuvers, brake checking).
And to your final point of the MMORPG in which it took 15-30 rounds to consistently beat even humans, you proved my point without realizing it. You went ahead and created an example I could have used to demonstrate the usefulness of cloud computing for the Xbox One. You probably are conveniently ignoring that an MMORPG is an MMO, hence, everyone plays on servers. MMOs are inherently "cloud" based by your definition, and thus are capable of employing exactly what I talked about into the general gaming industry, albeit maybe not at such an intense algorithm as to make the enemies "unbeatable". It took 15-30 rounds to beat the humans because it did exactly as I stated: took common human behaviors, and computed a preparatory reaction. MMOs make this possible because everyone MUST connect to the server to play, and this makes data gathering easy. When many Xbox Ones are connected to the cloud, this makes every game an "MMO", with millions of players providing plenty of data. This takes me to the point I've made the entire time: imagine your MMO example employed (again, less aggressively) into the GENERAL GAMES WE PLAY. Get it now?
In the end, as I mentioned in my first line, you will never falter in your way of seeing things, mostly because you think it's clearly above mine. As unnecessarily elitist as you are behaving, I will not continue this argument no matter what you come up with next in an attempt to "put me in my place", as you are clearly attempting to do so simply because you do not agree with the benefits the cloud can provide to the Xbox One (even though, repeating again, you gave a PERFECT example of what it CAN do without realizing it).
I also have nothing against you personally, but would like to remind you that your behavioral supremacy is not the best way to learn about the world. Arguing with me is fine, as I actually love a good debate (because for every 1 thing I know, there are 10 things I don't), but placing yourself above me with no real, tangible purpose other than to believe you are better is highly narrowminded.
I remember your thread on getting an x1.
I also think it's a great system.
But curious... Are you making any money from MS now to promote on Youtube, forums, etc?
I am NOT being sponsored by MS, but I have to tell you something blatantly interesting: the monetization on my Xbox videos provides a substantially higher percentage than my Wii U videos. I do NOT know why this is the case, but it may be why so many successful gaming channels focus on MS and Sony (I have yet to add the PS4, but I imagine it may be the same thing)!
When ZYRO announced he purchased an Xbox One and that he would be making Xbox One Content
So what will be your reaction to the PS4, then? 
