Sony has reportedly penned a deal with Gaikai to stream PS1 and PS2 games, and may show off the functionality at its press conference at E3 next week. The rumor states that Sony will debut the service with first-party games, and open it up to third-parties to sell their back catalog as well.
GamesIndustry.biz reports that the deal could extend past the PlayStation 3 and into Sony's TVs and tablets. It also speculates that this could serve as a test market for streaming on the next PlayStation console.
The PlayStation 3 originally included backwards compatibility natively, but that support was dropped in hardware revisions. Since then, Sony has made some available on the PlayStation Store, but it needs to engineer them to work with the hardware. This solution would make it much easier for Sony to offer older games without going through the work needed to make them function.
Shacknews has contacted Sony regarding the rumor, and will update as more information becomes available.