The industry cannot go fully digital for another two generations. If at all their are many reasons preventing a completely digital market. First physical copies still outsell digital by a landslide Go showed that a digital platform is not ready for market.

A new problem has shown up. At least here in Canada internet providers are now charging by the amount of bandwidth you use. The amount of content you load example now my internet is limited to 150 gig monthly. But word has it plans will be reduced further where a basic plan could be only 50gig.

So if other providers do this. How many games could you download each month without getting dined. Now lets say out use Cloud and streaming well you still couldn't play a shit load with a 50gig plan.

Now you also have retailers they will fight tooth and nail next generation to maintain competitive prices which will keep consumers in

When console manufacturers begin favoring online content the retailers will fight back. Nintendo will likely be last to go.fully digital and it will benefit them huge. Retailers will throw all of their weight behind the manufacturer supporting physical media.

Other things like the lack of high speed in many regions will hurt sales. I would say.physical media will remain paramount for another two generations the last generation coming during the third.

PS an attempt from Microsoft to eliminate used software will hurt them very badly. I can't think of any way they could do so without pissing off the entire consumer base. Nintendo won't and neither will Sony. With rental stores dissapearing from the market Microsoft will see sales hit to a degree. Other retailers like GameStop may not drop Microsoft hardware and software but they will focus more shelf space and resources on M's competition.

Consumers won't be able to bring their games to friends houses. This will piss of customers beyond belief.

In the end I can't see them able to it.

The day games are only distributed digitally will be the day I stop modern gaming.

You, Joelcool7, should get a gold star, because you seem to understand that, for the most part, RETAIL controls the distribution of game consoles.

Without retail, people won't see or buy said console, and because of THE RAZOR BLADE BUSINESS MODEL (people should look this up if they don't understand what this is), without Software to sell,Retail won't put said console on their shelves.

PSP GO = Failure

ONLIVE's Console = Failure (In America, I guarantee you've never ever seen one in any major chain retailer)

Brick & Mortar Retail is very important to consoles....very

Without them, You can have no successful console

While I am also on your side of the argument. The razor blade business model would not result in retailers losing money by selling hardware only... it's Sony and Microsoft (and currently Nintendo with 3DS) that lose out in that model. I'm not sure on the exact prices retailers pay for consoles, but I think in the UK the Wii was originally bought for about £110-120, and sold for £180... now 17.5% of that 180 went to VAT, which brings the money you give to the retailer down to £135, still a profit of £15-25 per console.

Those figures are all changed now of course as the Wii went up to £200 RRP before being price cut a couple of times in the last year (I think it may be at £130 or 150 now, though some retailers sell them for less) that and VAT is now 20%, but the principle is still the same... retailers do make money by selling consoles.

If retailers are cut out of the games business, they won't make loss leading special offers on HW anymore, it wouldn't make any sense for them. So the burden of pushing HW sales, particularly in the first years after launch, when production cost is still high, will entirely fall on HW producers shoulders, they'll have to offer retailers a far greater profit margin on it, like it already happens on any appliance or device that doesn't push other sales for the retailer. So forget forever overpowered consoles or short lifecycles, even now 6 years from previous launch has already become a bare minimum, with 7 or more years for those that can afford it, 7-8 years could become the new minimum, with 11 or more years total lifecycles. Every power and graphics whore will have to come back to PC.
PC will rule the gaming world again! W00t! W00t!! W00t!!!  

Edit: OOOPS! Joelcool7 beat me to these considerations... But he missed the logical conclusion, PC DOMINATION!!!   

BTW, PC will always have the physical media option available, it's a quite open platform, except for the OS, but even about it, MS won't ever drop the support for physical media, it will always widen it instead, as it sells Windows as a general purpose OS that happens to be a huge gaming platform too.

When the PS3 was launched, it cost Sony approx $850 to make, and they sold it to stores for approx $570 (give or take $20), and obviously we in America bought it for $600.

The only reason Best Buy would agree to such low margin is because of software that they could sell.

If Software is cut out of the loop, then PS3's would have cost us $1000+ at launch and we'd still be paying approx $400 today.

Basically, we'd be looking at a PSP GO situation (you ever wonder why PSP GO launched at $250 even though it was worse hardware than it's predecessor, and even though PSP 3000s were $169.99?  This is it.)

No thanks.

Couldn't have said it better myself. With this SOPA and potential rumor No-Used-Games feature on the next Xbox, people are aware that companies can restrict our rights as consumers even more. If we went full digital some companies can eliminate the concept of ownership through streaming. This is why I don't use Onelive, or to a lesser extent, Gametap.

Yep.

Because of the EULAs....You can't own the games.

This is why I will never ever use a fully dig. dist. system.