There are many things to be learned from the whole Xbox DRM story, but there's one I'd like to highlight here: the transition to an all-digital future must be handled with extreme care.  Microsoft has learned this the hard way.  They attempted to create a Steam-esque system that would in many ways unify physical and digital games (DRM for both types and family sharing for both types, just to give a couple of quick examples) while still keeping as many of the benefits of discs as possible (such as disc trade-ins to retailers), but they failed to prove that consumers stood to benefit from their new system, and consumers rejected it.  While I don't think that Microsoft's approach to the all-digital transition was inherently bad (after all, Steam did something similar and got away with it), I think there is a better, easier approach to the transition that will sit much better with console gamers: give digital games more of the benefits that physical games have.

What do I mean by this?  I'll list several ideas platform holders could look into that might make digital games really attractive.  Some of these ideas have gotten a lot of discussion in the last month, while others I've heard very little about.

1. Digital games can be played permanently offline, no strings attached; however, consumers could opt-in to (and subsequently out of) a plan that allowed any or all of their digital games to be downloaded and played on other consoles, provided they checked in online to make sure they couldn't just copy their games to multiple consoles.  Consumers could take individual games on or off of this plan as they saw fit.  One console could be listed as the primary console, on which anyone could play the designated game(s) at any time, and you could change which console was listed as the primary one at any time.  Secondary consoles could only play the game(s) when the owner is logged on.

2. Family sharing.  A certain number of people can be put into your family list; anyone on your family list will have full access to your digital games, provided they check in online so that they can't pirate the games.  People can be put onto and taken off of the family list at any time.  The owner can always play his/her digital games; details on how many people could be on the family list and how many could play shared games at a given time would have to be carefully negotiated, so as not to harm developers/publishers.

3. Digital trade-ins.  This is something I haven't seen discussed much at all.  At any time, you could "trade-in" your digital game back to MS/Sony/Nintendo and get cash added to your account to spend on other digital games.  When a game is traded in, it is immediately removed from your hard drive, and your licence disappears as well so your family list can no longer access it and you can no longer re-download it for free.  This would allow for consumers to get cash back for games they are no longer using, while avoiding the problem of middleman retailers turning around and selling the used game and taking all the profit of it.

These are the things I've come up with so far.  What do you guys think?  What other things could be added?  What have I overlooked that might derail one or more of these ideas?

just make digital 10 to 15 bucks cheaper and a lot of people won't care about trade-ins, family-plan or online checks.. look at steam, look at itunes, look at the appstore... for the right price we don't care about DRM and second hand sales..

yea if digital was 10$ or so cheaper more people would buy it. but than again alot of people (including me) rather have a phiscal copy of games

I'd still go for physical even with a price difference. I want my stuff. I prefer they just simply support both sides. Microsoft just made the one half assed in the middle before the retraction.

I actually think a small core group of people care about a physical copy.. Look at CDs vs MP3s.. small kids don't even know what a CD is anymore.. the average consumer will care a lot more about price then a physical copy.. I actually threw out my CDs and DVDs last year.. they really are space wasters..

That digital trade in idea is interesting, but I think Sony and Microsoft would be too greedy to try it.

1) I play all my Wii U digital games off line (except the rayman online challenge... that kinda the point)
2) All my digital content is auto-shared across any user on my Wii U. (pretty sure this is same on MSony) So "family" already shares one copy just like disc.
3) Yeah, they'll never do that unless they remove something else.

I think it would be better to have digital copies cost less. It makes more sense and removes the biggest reason why people wait for sales or buy digital and in the long-run its very likely the publisher/dev will make a lot more.

Ring-a-ding. Still think Microsoft could have largely gotten away with it, with the right sweeteners thrown in to hide the poison.

Rather than trade-in credit, there should be up-front credit when you purchase a digital copy. That would be a huge incentive. That's basically what Amazon does with physical copies. A $10 store credit with a pre-order for a new game would be an effective strategy, I think.

Actually, MP3's can kind of be turned into physical copies... but of course they have been trying to stop that with DRM stuffs.  It sucks because I have songs that can no longer be put onto any new devices because of it (I bought a legitimate copy of an album).