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Cheaper games. Easier sharing. The end of discs.

How does this preclude them from offering digital only games that you download via XBox live and enjoying all those benefits?

There is no reason you can't offer both models and give people the choice. That is exactly what's offered on the Mac now. In fact you have 3 channels on the Mac, traditional spinning disks (though these are increasingly rare now), direct download from the vendor, and Mac Store sales.

I totally agree about how obsolete spinning media is, that's why it's kind of surprising that Microsoft and Sony made disk players the heart of their systems. Microsoft could have undercut Sony by ditching the Blue Ray player or at least offering a version without one for a lower price. That new machine would have cut all the ties to the old world model.
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