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Downloading entire games wouldn't be that bad, it would cut production costs for developers and it would benefit the environment, but what if something happens to your hard disk? Besides games take up a lot of space on the hard drive as it is could you imagine how much next gen games will take up?
I just can't believe how many save files could fit on an 8MB memory card on PS2, and I never used all the space on the Xbox hard drive so do HD graphics really take up that much more space.
Oh and isn't MGS4 the first game to feature uncompressed sound?
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Downloading games might be something for the future, but not in the next 5 years. Online consoles are a luxury at the moment, not a standard. Fast internet connections are a luxury, not a standard (but quickly rising).
And I doubt it would cut any production costs. The pressing of 1 disc costs about 10 cents and takes 2 seconds. What would be saved on at least is the distribution costs, which should take about a buck or 10 off the retail price.