It's fairly obvious right now that MS definitely thinks that digital distribution is the way of the future. Developers also seem to embrace this idea as it can potentially circumvent the need for a publisher (although marketing, etc costs probably would still warrant their presence) and because it effectively eliminates the used game business (which they don't see a dime from).
If MS doesn't go digital distribution on their next console they will almost assuredly be forced into using BluRay media unless steady state memory drops dramatically in price over the next couple of years. In the BD scenario they must pay royalties to the BDA, which Sony is a majority stake member of. Do they really want to pay their competition for every game they sell?
So we look at their current position. They keep consistently, but slowly, raising the XBLA download size limit and price limit. This almost comes across as a testing the waters, step by step, to see if/where consumers draw the line. It also inches us towards acceptance as we are much less likely to balk at an incremental change.
The most significant problem with this method is broadband penetration rate in most countries is probably too low to accomplish this. I can't help but wonder if they may develop a workaround for this utilizing current retail channels though. "Download the latest games to your Zune at the nearest Best Buy and transfer them to your 720, no need to wait!"
I think we can all agree that Sony will stick with their new disc format, but which way do you guys think MS will go?
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