I know I can get 16TB hdds for less than 8TB hdds because simply put they are ot produced in great numbers anymore.

How many of those 1gb, 8gb, 16gb would realistically be used? Perhaps 2 skus would have been ok, but 5 different lines would mean they all cost more.

Physical isnt physical anymore,not a single freaking game is 100% on disc there are always a patch/dlc/microtransaction crap.

Physical died after tje 6th gen

I just checked prices.

Cheapest 8 TB HDD €138, cheapest 16 TB HDD €249.

So no, 16 TB HDDs aren't cheaper than 8 TB HDDs.

Australia sometimes does some weird things here because of how we get shipments into the country.

I can't find the drive I wanted any more for my security box (perhaps discontinued now), but here is an example of two NAS ones that don't make sense.

Like game-key cards, they sit somewhere inbetween physical and digital. They constitute only a slight improvement over game-key cards, namely that no internet connection is required to get the game on the internal memory.

Technical specifics aside, what matters in the end is how consumers see it. People who want physical games want game cards. Any proposed compromise is not good enough, especially because there's no good reason to have a compromise in the first place.

Nintendo uses game cards. CD Projekt Red did the same, so did the small publisher Marvelous. When Marvelous can do it, then what exactly is the barrier? Nobody has ever dared to give an answer to this question on VGC, so maybe you'll be the first one.

...

Now for an overview that is no direct response to you.

On Switch 1 up until its replacement, the physical to digital ratio for games where both formats were available was roughly 70:30. Third parties are incredibly optimistic when they believe that gamers will switch to digital on a whim. Perhaps they can get 10 percent points of the physical buyers to switch and another 10 percent points to go with a game-key card, but that still cuts their game's sales in half and reduces their profits.

Example for a $70 game:

300k copies sold digitally, publisher keeps $49 because of a 30% royalty fee = revenue of $14.7m.
700k copies sold physically, publisher keeps $30 ($16 for the game card, $14 for Nintendo because royalty fees for physical games have always been lower than for digital where console manufacturers picked up the 30% rate that was charged on Steam, iOS and Android already, $10 retailer cut) = revenue of $21m.

Total revenue for the publisher: $35.7m.

Same game foregoes to have a physical version:

400k copies sold digitally, because some would-be physical buyers go digital = $19.6m.
100k copies sold as game-key cards, publisher keeps $38 ($1 for the game-key card, $21 for Nintendo because Capcom has gone on record that Capcom counts game-key cards like digital games and that would be why, $10 retailer cut) = $3.8m.

Total revenue for the publisher: $23.4m.

The reason why I type this out is because I have the impression that a lot of gamers believe that physical games do not generate profits. But the only thing that is true is that physical games have a lower margin, yet this is offset by the much higher volume of copies that are being sold when a physical version is offered. And in Nintendo's ecosystem it's still the case that physical is greatly prefered - CD Projekt Red confirmed that ~75% of Cyberpunk 2077 copies sold were physical - so this matters to the bottom line.

There's a misunderstanding here. Game prices would have gone up with Switch 2 regardless of the physical storage medium, because game development costs keep increasing.

We're seeing things quite differently - when you buy CD/DVD/BD, that's very much a physical copy of the game. Whether or not it requires installation (like most PC games from mid 90s onward required), either partial or full, is irrelevant. What matters is that it comes on physical media that you bought and can store, and eventually whip out of that storage 20 years later and it will work on supporting hardware. This would be the same case with proposed cheap "install required" Game Carts.

GKC is just a code on the card, instead of code in a box, and doesn't work without servers from where you must download the game.

What real difference is there between having the data on "holder cartridge" that is otherwise useless at running the game itself versus downloading the game online onto a SD Card?

The data is the same in either case, no? If you pop the SD Card in there 20 years later, you should theoretically have the same data as you would on a cartridge. 

Technically, yes, in that case it would be the same once it's downloaded to SD card. Except for this thing of having to actually download the game and transfer it to external storage - well, just like with any digital game on consoles. That and "install required" Game Cart coming packaged in the box - well, just like any other CD/DVD/BD game.

Try to look at it this way, since to me it seems to be messing with your perception, maybe because it's also just SD card - let's call this "install required" Game Cart a "Game Disk", and imagine that inside is actual disk, like UMD for PSP was. Data is on the "disk", you pop it in and install it onto your console. Sounds familiar?

You didn't answer the question. I suppose it's because if you did, you'd be forced to acknowledge that a proposal like yours isn't necessary in the first place.

Third parties can make the choice to be either pro-consumer (game card) or not (game-key). When third parties decide against consumers, nobody here should defend them for it, especially when you consider the maths I've laid out, because it shows that even third parties themselves lose by going with a game-key card.

Not wanting to lose $16 of your profit margin is not "anti-consumer". That can be likely somewhere in the neighborhood of 40% of the profit margin, asking companies to take a 40% hit on Switch 2 versions of games is ridiculous.

No business anywhere would be OK with that.

Cartridges suck and always have sucked when they get expensive and there's no way around that. Happened in the 80s (when Nintendo came damn close to ditching carts for disks hence the Famicom Disk Drive) and happened again in the 90s (the N64 debacle which handed Playstation the entire home console market on a silver platter). 

CD Projeckt Red doing it for one game doesn't prove anything, that game is heavily discounted on other platforms, at $70 relative to other platforms even with a cartridge they likely still come out ahead. It is a 4 years old game and already turned a profit likely years ago anything they sell from this point on is gravy. That is not comparable to games like Star Wars Outlaws where the game is probably still hasn't broken even or new game releases like Borderlands 4 which need to recoup their development budget of years of work. 

Cartridges in the long term were never going to be a viable format for a Switch hybrid *console*. The fact is the Switch was eventually going to have to increase format speed and adopt faster internal storage like other consoles have. To do that and have higher capacity cartridges that can store today's modern game releases that are huge (quite often 90GB+) it always meant the cartridge medium was going to be pushed into expensive territory. If Nintendo was making some 4DS platform with junk ass specs and a $200 price point, OK, cartridges with storage of 16-32GB at super slow speeds would be A-OK. But that's not the product that the Switch 2 is, it's a modern game console that can run even modern 3rd party games. There isn't a cartridge format well suited to that and optical discs are a non-starter on a mobile device.