Downloaded games will eventually be replaced by browser games
Trip Hawkins made some great observations about the evolution of technology as it relates to the user experience. His conclusion is that simple and easy will win, and of course nobody can disagree with that.
YouTube simplified the online video world by keeping everything in the browser and not requiring anyone to install or remember anything. Everything users needed was already online waiting for them. When they emailed a video clip, their friend only had to click on it to play and bookmarks made it a snap to use the service again and again.
Simple: check. Convenient: check. Viral: check. Cha-ching: check and check.
Replace “YouTube” with your company and “video” with “games.” 
The fact is that the number of people that choose to play games in their browsers will be far greater than the number of people who are willing to download, install, and then fiddle with configurations for an equivalent experience. Maybe this is deployment Darwinism at work?
This won’t happen right away, but the path is clear and things like Google’s Native Client will make the rate of moving everything to the browser even faster.
For you nit-pickers, I do acknowledge that even browser games “download” data, but it’s not the same for the user experience, and that’s what I am referring to here. The user doesn’t need to download, find, and then install the game. There are always exceptions, but that process is a huge barrier for a lot of people.