It's genius really. They make higher profit per game by not having to ship physical games anymore and sell to retailers. They can entirely control their own games market by having everything go through their own digital store. And with everything digital they will have to put way more disk space in future systems which jacks up the price of their future hardware even more. Now sure they might lose a bunch of customers, but each of those customers will be handing them more revenue and they'll be making more profit from every purchase as well. Since the games industry these days focuses not on getting more customers but about getting as much money as possible from the customers they do have, this really is the ultimate strategy for that.
As for me, personally I"ll stick to my huge backlog of Switch games as well as start to buy mostly indies on Steam, while I watch the console industry implode in on itself from greed and bad decisions.
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