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Wouldn't abandoning physical media be really bad for console manufacturers relationship with retailers? Isn't it possible that many retailers wouldn't even want to stock a console that doesn't have accompanying physical games? You are definitely not going to have a lot of shelf space in stores to promote your product.

These are just some of my reservations with this move. I think going with something cheaper than an optical drive (such as an SD Card reader) would probably be best of both worlds and would still allow for physical games.