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CDiablo said:
Physical is usually cheaper than digital with consoles, so physical it is for me.

As for your plans I would suggest a rental program(gamefly in the US) for those games you would normally buy then trade, its can often be cheaper than buying/reselling if you play a lot of games.

Rental makes sense. Over the past two years, Sony and Microsoft have been aggressively trying to take on Steam though, so everytime Steam seems to have those sales Sony seems to follow and then MS comes afterwards.