People use Steam as an example, but the problem is console manufacturers have to avoid pissing off their retail partners. If Nintendo, Sony, and Microsoft made Donkey Kong, inFamous, and Titanfall $30 digitally while their retail counterparts were $60, their partners at Gamestop and other outlets would be furious with them. It would harm those relationships, which would lead to a dropoff in those companies' support for the hardware.

Ultimately the only way I see this happening is with the formal allowance of competition in selling DL codes for Xbox Live and PSN.  

This would only occur if one major manufacturer allowed it (unlikely) or a major regulator in either Europe or the USA required it.

For example, a regulator could decide that right now publishers compete with each other on game quality (product differentiation) and retailers compete with each other and manufacturer-centric digital distribution (obviously this doesn't include PC) on price.  With the decline of retail, the same regulator could decide that competition is insufficient (almost like MS being required to unbundle internet explorer in parts of the world), as product differentiation still exists, but price differentiation does not.

The latter is more likely than a manufacturer leading the way, but it would still be a long way off.

Seeing as digital is pricier here in Australia than retail definitely. Who wants to pay more and use up a bunch of their downloads when you can take a quick drive to pick the game up cheaper and start playing immediately.

Which is another concern.  In parts of the world where data is capped at low levels, and bandwidth is expensive for consumers, it can actually cost us more than the list price to download a game than to buy it at a store.  In other words, the publisher/developer/MS make a far higher margin on the game, and yet we actually have to pay MORE to get it digitally, both on their price and the delivery over our pipe.

Yes please.