They can collect something else...

I can't see this happening. The whole purpose of used game market is that you have something physical which you can hand over to someone. From this is born a market where you can give someone something, but at a price, your own price. What your giving over is not new, therefore its value is percieved lower and thus its sold for a cheaper price then you will find elsewhere in the market. Retailers adopt this and make money from it. In a digital world, there is no such thing as second hand, or wear and tear. Every game is a new game, there is no longer a physical thransfering of property, there is no longer value depreciation. To be blunt there is no market for this.

I agree, though I think Microsoft has it backwards.  Consumers tell companies where the industry is headed through their actions, not the other way around.  There will come a day where the digital sales for a new AAA title exceed that of the physical media version, but that's not today.  This philosophy makes too many assumptions about the level of broadband infrastructure in homes and that people are ready to abandon their physical media.

Look at the CD.  When iTunes came out, companies didn't stop making CDs.  They make more money if someone buys an entire album over a couple singles (the major flaw in my comparison, but you get why I'm making it), and consumers aren't ready to let go of CDs.  As CD sales slow, that section of retail stores gets smaller, and eventually disappears.  People are still buying CDs (myself included), and for a lot of different reasons.  Some people like feeling like they own something they've paid for, some like collecting and showing off their stash when friends come over.  I personally like to buy a CD and rip the MP3s off it, the CD serving as my legal backup copy, not tied to iTunes or any other service.

For games, I like owning the physical media.  There's an excitement with browsing games on the shelf, getting a new game from the store, that "new game smell", flipping through the instruction manual, admiring the box art, and amassing a collection that you can show off to your friends.  I'm a PlayStation Plus subscriber and I've filled up the hard drive on my main PS3 slim.  Does that mean I'm ready to give up physical media?  No.

A better path towards leading the consumer to all digital adoption may have been to offer digital copies of games for less than their physical counterparts.  With no manufacturing cost, they could offer games for $5 less, which could be attractive to some.  Sure, there's infrastructure required to support the digital download and it isn't free, but it's a negligible cost to facilitate a consumer-friendly transition to digital.  Would I still pay the $5 premium for my physical media?  I would, but they'd get a lot closer to their goal without pissing a bunch of people off.

Yeah but I dont have to be always online on Steam and iOS and they dont block physical games.

Indeed. And those are valid points.

But MS is positioning this console as the lead in to the digital age. Not to create a massive Hitler who wants to take your soul. The thing is most people who take the time to go on internet forums feel personally attatched to their consoles and believe companies owe them things. They dont.

MS isnt evil by any means by going this course and to claim they are is silly. Its simply a business model which they believe will lead to higher profit margins in the long run. That doesnt mean someone has to like it and when all is said and done people can vote with their wallets come November.

But this idea that MS is attacking people is strange. Its the business world ALL companies are out for the consumers dollar. They will find any way they can to grow their business. 

They plan to "educate the customer" on why DRM is good? Good luck.

Solid post and you make some excellent points.

The onky thing Ill really comment on though is the idea the consumer tells the business world what direction to go. This isnt always true especially when business models start adapting to long term goals and ideas. Usualky the infrasctructure is designed far before full scale implementation in order to be "future proof" and often times products are designed to move consumers towards the companies end goal.

In the case of the gaming industry the end goal is digital only. Sony is also slowly trying to move people this direction. The free games and discounts on digital games PS Plus offers is a prime example. They are getting people used to the idea of downloading full sized games.

Exactly the same question I have. The Digital age is just around the corner, the industry is moving towards it. So why restrict the Physical Media when the majority of future sales is already going digital.

I think you can better position yourself with better all around content and without the restrictions.

That is indeed their goal. No idea if it will have any success or not but that is what the X1 is designed to do. There is already no rights with digital titles. When you download a game off iOS, Steam, or PSN / XBLA you cant resell it.  Its yet another obstacle in the way that the consumer isnt fully used to yet.

If MS can somehow convince the general consumer to get used to not being able to resell or lend physical media they will be less likely to fight them over digital rights of games. As I said MS is trying to train the consumer to embrace digital only model over the next 5 or so years. For better or for worse.

when i see a full game with all DLC for $7.50 or less on M$ store, i will believe it. i highly doubt it will be anything like steam sales. not from experiences with them in the past.