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Microsoft is setting itself up for its next console. I'm sure they wouldn't want to put a blu-ray drive into their new console, so the only way to deal with the lack of space would be to go fully dd (digital distribution) Of course dd is a bit too pre-emptive much in the way that blu-ray was and won't catch on in the next 3 years when 720 will likely come out. I keep hearing digital distribution is the future but its no where near that. Take a walk in BestBuy and notice all the rows and rows of music Cds. Haven't those been completely replaced by Itunes? Of course not-harddrives fail and unless you purchase Itunes plus songs you still have to deal with DRM issues. And y'know nobody buys movie collector sets of anything I mean its not like there's collectors sets of music cds and video games now too... Oh wait. 

Not everyone has a T-1 line, not everyone has 100 terabyte harddrives and not everyone lives in the Hamptons

sorry Microsoft.