Honestly I do not see downloading as replacing physical media. The issue is not that it is impractical. The issue is one of faith. The same issue that plagues the plastic versus cash debate that has gone on for over twenty years. Consumers will have no confidence in a product that cannot be converted into a physical asset. That said downloading will not be desirable for the vast majority of consumers until such a time as it is permitted by manufacturers. That consumers can use their devices to burn those games to a physical media. Which they are adamantly against.
Downloading through services such as Netflix isn't about purchasing a product. It is simply a rental model. Were you spending money to actually acquire a movie or a video you would want assurances that your purchase could be physically protected, and that it had an exchange value. Whether the industry likes that or not. Nobody wants to place excessive faith in a consoles storage if that same console is under the direct control of a corporate entity. Especially if that entity is not committed to full assurances of back up.
I have said it dozens of times. The first console manufacturer which allows the most basic feature of burning downloaded content to a physical format will have a massive advantage in the market place. It bypasses the very need for larger hard drives, and it provides real security to consumers.
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