Do you all think Microsoft was right when it predicted that Digital Streaming/distribution would be the future and not Blu-ray?

I ask this because I find myself more and more interested in just downloading games and movies as long as they are at the right price.

A couple examples being Netflix and Steam. Netflix has grown to over 15 million users and since their Instant Queue has become so popular, they now offer a streaming only option. The success has been so great that Hulu even joined the party and losers like Blockbuster are trying it out to save it's failed business model.

Steam, on the other hand, is the biggest game distribution hub on PC's. It is the clear leader in that distribution method, which has beaten Retail in units sold. Other than steam, consoles' digital offerings have become more robust as well. If you compare what came out at the beggining of the x360's lifespan (gauntlet, joust, Feeding Frenzy, Marble Blast)

to the games that have released recently

(Dead Rising: Case Zero, Toy Soldiers, Shadow Complex, Trials HD)

You can see the gigantic increase in quality of these games over the leap in years. Although most of the thanks should go to the tech becoming easier to work with for the developers, I can't help but think publishers have been placing more resources into their digital games because they see big dollar signs. Where before low cost ports and indie games were mostly released, now the big names are interested. It's no suprise that in 2009, sales in the XBLA hit 100 million.

And just keep in mind, that's only the XBLA part. There are indie games, Games on demand, and game add-ons as well that microsoft also has in their digital arsenal.

iTunes might be the heaviest hitter of them all, though. With over 6.5 Billion apps, over ten billion songs, and who knows how many videos downloaded, they are truely never going anywhere.

So what do you think? Have we really come that far since 5 years ago? Do you think digital copies will be more widespread than blu-ray? Or aren't they already?

edit: and yes, I do realize how ironic it is that Apple is probably the biggest example.

No, physical media will never die, becasue people prefer owning them and having control over the products they buy.

M$ was partially right this gen. All-digital hasn't and won't work for games until A) somebody puts download kiosks in coffee shops and electronics stores around the world or B) bandwidth limits are abolished and high speed cable broadband is available everywhere.

Next gen, I think M$ will try to incentivize downloadable versions of games.Something like, if you download Gears of War 4, you'll get access to all the maps for free or the downloadable version of COD:XX is made available to consumers a week before the disc version is.

I love digital distribution since the first downloads i clicked on my dial-up connection more than a decade ago... But i also love having the product in my hands and having total control over it... 

Netflix is so popular because of the rental model, Blockbuster failed at that, but Blu-Ray market is in the sales, not rentals, and the media has good sales and a good market growth... 

Microsoft being right? they didn't have a stand in the first place, they just picked whatever that was not blu-ray, twice.

Apple, however, did have a stand in Digital Distribution when they launched iTunes.

I thought they predicted HD DVD was the future?

In the long run I believe that physical media is doomed ... In the meantime, I would say that disc based formats will remain dominant and slowly lose appeal to digital distribution. Blu-Ray itself will probably not be a replacement for DVD, but that doesn't mean that physical media (in general) is a bad idea at this point in time.

Personally, I think Blu-Ray's appeal would have been far greater had they waited until 2008/2009 to release it and if it would have been a flash-memory based format. If your spec is well crafted, there is a lot more potential for "forwards compatibility" from a memory based format than from a optical disc format; and, with how big portable media is becomming, being a smaller portable format would be a massive advantage to most consumers.

Agreed, especially if they maintain download limitations for games on an account. Some people change hardware like clothes and 3 download limit ain't gonna cut it.

You're trying to be too black and white because it'll vary by medium and region.

Songs are easy to download and increasingly people play music while moving around - hence huge interest in digital purchase which has been matched by huge interest in portable digital music players.  Even in regions that have much poorer technical infrastructures the small download size makes it fairly feasible but of course even here the CD is alive and well in many regions where even a 1MB download is considered very large.

Games are split depending upon the size of the game and the region.  Even in the UK with fairly fast broadband I'm not really keen on downloading 20GB of data unless I have too.  Also, even with fairly big hard drives the numbers of games you can keep gets limited by storage vs disks on a shelf.  However, for smaller titles downloads work great, particularly for consoles.  However, of course in some regions digital is a no-no due to infrastructure and hence physical disks will be around for a long time yet.  I think PC gamers probably lead console gamers in terms of using downloads - and not always legally!

Films are split by region depending upon infrastructure and viewing habits.  For a quick rental of a basic film I'd consider a download but for a film I'm seriously interested in I have no interest.  Digital quality still lags physical media, and if you're a realy film buff and want to own the film then Blu Ray is definately way more attractive at the moment.  Also, again their are storage issues.  If I want to build a big library of classics how much disk space would I need to hold say 200 plus films plus a lot of extras?  A fair bit I'd imagine.

So, neither was right and neither was wrong, and both are chasing slightly different goals currently.  MS want gamers into digital who don't mind dropping visual quality to rent a movie for a one time watch from Netflix, who want to stream music, etc. from a PC and who will mix digital/physical medium purchase of games.

Sony are after a similar demographic but also want the high end physical copy demographic as well, who will re-buy something like 2001 each time provided the resolution jump is always there and the new copy gets closer to watching the film in the cinema.

Really long term I'd imagine everything will go digital, but physical will be around for a long time yet, and both Sony/MS stand to get plenty of custom via both channels.

My view is, we'll know when the tipping point has arrived if something like CoD could open digital only and sell as much and be downloaded easily by that volume of owners.  I'm not convinced we're remotely there yet, which is why for games/movies I'd argue the majority are still physical storage focused vs digital.

By your logic, Microsoft is wrong as well, since they continue to release 360 games, Windows 7, etc. in DVD/disc format.

My point is, the two medium are not entirely mutually exclusive (someone draw a Venn diagram to illustrate this), and they can coexists. Ie; just because Digital Distribution is "right" does not make Blu-Ray "Wrong". I enjoy buying Blu-Ray games/movies as much as I enjoy downloading games off PSN.

Sony and MS are both doing digital distribution, however not to the extent of Apple's Success.