I'm a big proponent of digital distro, but most models fail because the content owners and/or distributors try to hog all the benefits yielded to themselves. They want more control and lower costs for themselves while still charging the same price to the consumer.
The key is to deal the consumer in on the benefits. They need to see some of those reduced costs turn into lower prices and they need incentives that compensate for any loss of ownership. iTunes worked because it was priced the same or less than most CDs, the terms of the DRM weren't very restrictive (and now there is no DRM at all), and because it allowed the customer to just buy the tracks s/he wanted. For most consumers, the incentives have outweighed any added costs.
If Sony wants the PSP Go to succeed, there needs to be no full-priced games for download. Every downloaded game needs to be sold for about 20% or so less than MSRP. And as the new and used price of that game drops in the retail space, the download needs to keep pace. This price discount is the consumer's share of the benefits of reduced cost of manufacturing, distribution, and retail. Furthermore, they need to offer a way to transfer games to another device if necessary (they may already have this for all I know), because losing all of your games if your device fails or gets lost is a ludicrous cost for the consumer to bear.
"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.
