Why a digital distribution console is bound to fail.

[Millennium]

One_touch_KO said:

How come retailers would not like it?

If they can make a profit on it, of course they will sell it.

To some degree, yes, but retailers don't make much of a profit on consoles: the margins are extremely thin. Games are far more profitable, both in terms of margin and volume (except for PSP games, where the hardware outsells the software, but even there the games are still more profitable in terms of margin).

Remove games from the equation, and you've taken away retailers' biggest source of profits. Most of the specialized game stores are unlikely to be able to sustain themselves on hardware and accessory sales alone, and they know this. Go to download-only and you kill an entire segment of the retail market.

Not that game makers particularly care, I think. They'll still be able to sell their consoles through big-box retailers and more generalized toy stores and such, and in their eyes the death of the specialized game store is a small price to pay for achieving the real goal of downloadable games: killing the used market dead.