Currently Online 
The issue at first wasn't the idea of promoting downloading titles or installing disc but because of the checks and essentially calling us all thieves. Now they have 'apologised' for that and done a normal console, they can continue with their ideas. Having 2 SKUs seems a good idea, a digital only at a vastly reduced cost and one with a drive.
The only issue then would be competition on their market place. If it is the only source for which you can buy games, they will fix prices and con customers. No competition is bad for consumers and if games just stay at RRP, while high street stores keep reducing costs on disc versions, more people will just by the drive version or a competitor where there is more freedom to switch or trade.
Oh and they'd have to make it so you can change/upgrade the hard drive. That is a must.
Hmm, pie.
