Apple is already there and doing fine. Games you buy on your Iphone/touch are much cheaper than PSP games, but the concept is the same and will work just as well if properly implemented. Steam has also proven digital distribution works, but obviously there are challenges for Sony here. Games on Steam frequently go on sale, sometimes for 75% or more off, so pricing really shouldn't be a big issue. PSN also has sales from time to time.
They could sell retail games for a premium on read-only memory cards.
Regardless, they *NEED* to drop the bulky umd drive to make a desirable hand held. Keeping the umd drive is a liability for the form factor of any future PSP revision.
Demon's Souls Official Thread | Currently playing: Left 4 Dead 2, LittleBigPlanet 2, Magicka
