It's been pretty obvious for a while that boxed retail in games will die someday, but recent news that Amazon will buy and sell used games definitely seems like one of the nails in the coffin.
I can't blame retailers such as Amazon, or BestBuy for entering the used game market, but I really wonder when the major players in the game industry will wake up and realize that the day when all games will be downloadable is sooner rather than later.
Another way to phrase the question: when will a major console manufacturer release a console that does not contain any sort of removable DVD/bluray drive?
Consumers are already used to downloadable games in many other forms - cell phones, the iPhone, web games, Steam, Gametap, XBLA, PSN store, etc. There are even rumors that the next version of the PSP will not contain a UMD drive.
So why not cut the cord? Imagine a console comes out in 2012 which does not contain any sort of optical drive, and instead just a large hard drive. All games, not just ones deemed small enough for a special "arcade section, are downloadable.
There would be issues. Currently US broadband adoption rates are at 59% of households, well behind Japan or Europe. Even optimistic projections estimate that by 2012 only 77% of US households will have broadband, although it would be interesting to know what percentage of console gamers will have broadband. Still, it would be a definite leap of faith to exclude such a large percentage of households from buying your product.
As far as the user experience goes, I don't think there would be many problems. Even if games took multiple hours to download, I don't see how that is any worse than getting a game from GameFly or Amazon is now. Steam has experimented with allowing users to "predownload" popular titles before their release date, and a similar model could be used for the users that just gotta-have-it the day of release.
Another advantage of this approach is some savings on cost-of-goods on the consoles themselves -- for example, the bluray drive in the PS3 is probably a big driver of the total cost of that system.
The only question is how retailers would react. They could threaten to not sell the console hardware, but a colleague of mine had an idea about that: prepaid download codes. Retailers could sell these along with the hardware. It won't be as lucrative as current boxed retail sales, but then again, by pushing used game sales so hard, the retailers are eventually going to force game publishers and console manufacturers' hands.