MS was completely wrong, physical media isn't never going to die, blu ray is the obvious future here are some things to think about
-Storage size: the average game is about 8 gigs (behind held back by dvd) on 360 and ps3 exclusives are like 15-20 gigs on average there's no way you could build up a decent collection with DD only, not to mention if you wanted movies and other things on your harddrive, there just isn't the space
-The rest of the world: NA has pretty much the best internet network and still they can't stream blu ray quality movies, UK is next best and japan is up there I think everything else would be pretty much impossible to reliably download full size games or movies on, when you can just ship a dvd or blu ray to it the same as anywhere else and get sales, I mean MS doesn't even have xbl up in half the countries they ship too, and pretty much everywhere besides US they have a poor network so again not going to happen
-Price compare to HDDs: blu rays are cheaper to make then a harddrive of the same size, much cheaper, so for the consumer when buying something that takes up alot of space it's cheaper to buy blu rays then invest in a massive harddrive which still might not be enough
Don't get more wrong DD is going places, it makes it much easier, cheaper and faster for smaller files and works out great, but storage media is just so much farther ahead in terms of storage capacity and don't rely on online networks, storage media isn't going anywhere until the entire world is covered in wifi thats capable of downloading gigs a minute and even then we'll probably have storage media being set to a mars colony or something
