I think you're right about digital distro. I hope next generation has a solid model, with a reduced price for downloaded games and a wide availability of titles, but I expect games will still be available at retail. But publishers absolutely have to offer more incentives than just a convenient download to persuade me to take a locked-in digital file over a tradable physical disc.
The success of OnLive and whatever other 'Cloud' gaming services come to emulate depends just as heavily on the business model offered as the technical feasibility. People want ownership and control of the content they like best, and you'll have to offer something enticing with your service to overcome that material need. Even iTunes is starting to show cracks, because it's no longer cheaper than many CDs and comes with more restrictions.
Until we see what companies are prepared to offer in exchange for physical media, there no point in predicting the death of the console.
"The worst part about these reviews is they are [subjective]--and their scores often depend on how drunk you got the media at a Street Fighter event." — Mona Hamilton, Capcom Senior VP of Marketing
*Image indefinitely borrowed from BrainBoxLtd without his consent.
