I could certainly see prices dropping in a all digital market or a defacto digital market like the Xbox One is going for. The question then is, "why would I buy a Xbox One when I already have a PC?" Everyone needs a PC after all for web browsing, word processing, ect. ect. but a game console will, under this model, be a PC with a gimped OS that I can't really install any useful programs on nor can I upgrade it. Buying cheap used games was one of the main advantages of consoles ... what advantage does it have now? Let's say the next Xbox releases for about $400 and games are cheaper. We are probably still going to pay for Xbox live, and we will still need to own a PC anyways (basic web surfing only PCs go for at least 200-300 for a halfway decent one). 400 + 300 = 700 which is enough to buy/build a mid range PC capable of playing virtually anything a console can offer along with a slew of PC only games and a wealth of free games and MMOs. Video game consoles become obsolete under this model.

One of the key advantages of consoles over PC has been a cheap used market that allows for swapping games with friends. You buy relatively cheap dedicated console and avoid the hassle of upgrading hardware while buying pre-owned games on the cheap with some occaisional good 1st party games that PC players would not get. With used games eliminated, we just have the few exclusives that Xbox will offer. Even with the supposed 15 exclusives coming to Xbox One, how many of those will also be on PC remains to be seen.

After pondering all of this, I am starting to understand why Xbox One is moving towards TV and ect. in order to justify the existence of a console in a market where one can buy a PC, tablet, ect. that can do pretty much everything the console can do while also offering additional vital services (word processing, internet surfing ect.). Microsoft is going to have to do more then just turning the Xbox One into Steam since Steam exists on a device that everyone needs regardless of whether they are a gamer or not.

I guess as a retro gamer I was hoping things would continue on this way. In the not too distant future (after Xbox One goes under in favor of the next console) the only way we can access these games will be through emulation. It is not the end of the world if consoles go in this direction, but it does make it difficult for anyone to justify the purchase of consoles when PC offers literally everything a console can offer on a device that you need to own anyways. Used games was always a big advantage over PC, but it looks like that is going away.

Also, I refer to it as "renting" since ownership is never really transfered. I will have access to the content I "rented" only so long as Microsoft keeps its servers running (so they decide when I "return" the product). I can play any of my Xbox 360 games 20, 30, or however many years from now so long as I maintain my system. Xbox One games will all have an expiration date on them that is determined by Microsoft. No matter how well you maintain your games, they will be paperweights in 5-10 years depending on how long Microsoft keeps the servers up.