Yes, they do, if you treat specific games as the individual products that they are. Competition only prevents monopolies in a case in which two or more companies are selling an identical product.

As an example, consider Coca-Cola. The Coca-Cola Company manufacturers cans and bottles of the drink, then sends it off to retailers, who in turn sell it to the end user. Because of that, the Coca-Cola Company doesn't have a monopoly on Coca-Cola; they dont control what happens to it after it leaves their hands. Once bottles or cans fo Coke arrive at the retailer, the retailer may sell them for a markup (which is what usually happens), sell them at cost, sell them at a lower price than what they paid, or even give them away. The end user may do the same thing once they buy Coke from the retailer. This means that, in essence, the Coca-Cola Company, retailers, and the end user are all "dealers," in a sense, of Coke.

Now imagine that the manufacturer - the Coca-Cola Company - is able to encode some sort of new, hypothetical technology in their cans and bottles of Coke that enables them to control what happens to the Coke after it leaves their plants. Say that they suddenly eliminate the middleman and sell their Coke at a fixed (high) price directly to the end user. They then use this technology to the effect that the Coke cannot be given away or resold. Because the company would be the only dealers of Coke in this scenario, it would be demonstrating unilateral price-fixing - in other words, a monopoly.

While it's true that there are other colas out there, none of them use the exact formula as Coke, and they can therefore not be considered a substitute. Regardless of their all being colas, Pepsi, RC, Jolt, etc. all taste different, just as no two shooters, RPGs, strategy games, whatever are the same.

That's why digital distribution would create a monopoly - perhaps not in the traditional sense, but in a different paradigm that demonstrates all of the drawbacks and flaws of one.

yes, but there is competition, you are just proving my point, i do not think you understand what a monopoly is.

 edit: in that  sense every product made is monopoly. Pepsi, rc etc are subsitutes for coke, you can not say they aren't. in the same sense publishers compete for sales with eachother, they do not have a monopoly.

I have a few problems with everything going digital.

One Internet limitation: I dunno about you but I'm limited on how much I can download/email etc(it's like 110GB but still...).

Space issues: For desktop PC's 500GB + is cheap my PC has 2, 750GB HDD and a portable media drive bay(for a 2.5") for laptops the price is considerably higher, for game consoles(PS3 qualifies with laptops) the space is limited and expensive.

Physical media: I dunno about you but I LIKE having a collection of games in my room. I have about 200 games on display on a shelf and at least twice as many in storage in my closet. I can keep them, beat them up, trade them, sell them do whatever I want. This can't be done with downloadable content. It's fine in conjunction with physical media but not alone in my eyes. I'll never go for it.

Life: Hard drives, flash memory etc ALL has a finite number of write/read that can be done on the specific clusters inside. They have a life expectancy. I'll readily admit it's a LONG and LARGE life but it is finite and will end. When my hard drive dies... what happens? I can't get my content back... I lost it. This is something that actually worries me... I have NES games I've spent hundreds of hours playing.. can I do this endlessly with a hard drive and the content downloaded on it? Sure can but when will it end when will it die? I won't know untill it's dead.

It will be interesting to see how the public reacts to downloading 4GB games. I see this as a test for the future more than anything else.

Personally I dispise physical media with a passion, both audio, games and movies. If they just make a good system for downloads (and re-downloads), I will be very happy. All console makers are doing their tests and we'll see when it's ready for "prime time". Maybe handhelds will be first.

Ummmm. What?

I've never had that problem with any Xbox 360 I've played. Every arcade game I've played can be played offline fine (considering I don't have a XBL connection at my home and play Puzzle Quest every day).

You really should check facts before you post you know....

Also, for those whining about the size of HDDs: you know the X360 can use USB HDDs, right?

I doubt Microsoft would let that happen.  It may lead to people buying a single copy of Halo and distributing to several consoles.

Microsoft has been promising this since launch, I'm not exactly holding my breath.  Paying money for something you can't see, feel or smell isn't something that appeals to me anyway.

Garcian Smith is right, 3 of the 4 launch games are much cheeper in retail bargin bins such as Zellers, Wal-Mart or Best Buy or used game shops like Gamespot or EB than what's offering on Live.  The fourth game Pyschonauts, is $10 if you are looking for a copy without a box or instructions.

So this is the best news ever?

Could have fooled me, as I think it would have been even better news if MS would have lived up to it's promise of bringing 100% backwards compatibility to the 360.

As Live is officially not going to be added to games now, it seems people are overjoyed at paying MS to play their old games rather than hold them responsible for actually living up to their promises.