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Sqrl said:

Digital distribution is better in every meaningful way, the only downside is a psychological one. Physical media can be lost, broken, stolen, etc..where as digital can be re downloaded at any time. If your console gets stolen there is no games for them to take also, you just remove your console from your account and re-attach it to your new console and voila you only lose the console and not the 20 games you own.

The only thing holding this back right now is bandwidth for most consumers, but that will get much better in the next 10 years and I would be surprised if we weren't downloading the majority of our games by 2018 when the Xbox 1080 launches =)

don't forget about space and efficiency.  I have 3 bookshelves in my living room just for dvd's.  although i do love my movies i'd prefer to get rid of them in favor of electronic copies just like i did with my music.  and i love the search features for finding my music, beats the hell out of searching the shelf for ten minutes to find that one CD you want to listen to.  I want those convieniences for my movies too. xD