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I suppose the idea was to make it scale up in production and become cheaper eventually, but the result will probably be game key cards ahoy for a generation.

Almost no developer wants to be the one selling their games with a $15-20 physical media cost first unless they can charge more or think it'll increase their sales enough to make up for it.

Digital will become more important than ever and it should, really. A portable has no business being encumbered by physical media in this day and age.