Are these costs high vs cloud storage ?OK let me explain why I think cloud storage has more advantages over digital download.
1. Obviously, you eliminate the need for large local storage and necessity of maintenance of the storage.
I don't think the entry price will decrease at all. To even get close to todays console's image quality you need quite a capable pc and even then onlive looks worse2. Console manufacturers will lose the additional revenue from the storage peripherals but the solution is definitely cheaper for the end user. This decreases the entry price of the console significantly.
Who's considering that . We already have 250 gig hardrives in current gen consoles. A system designed for full DD will obviously go with 3.5inch drives in which as I've stated the end user has acess to 2 TBs for $100 bucks or close to that in 2010 most likely 2 years before any such system releases. 2TB allows for 80 games at 25GB a game. That is far more than the average person will buy in a console cycle and of course non played games can be deleted and redownloaded at a future date if the need be.3. No physical limit for user. Eliminates the need to uninstall games before new purchases. This may be of concern in a full digital download based system considering that next generation of consoles will not be launched with multi terabyte local storage.
4. It makes sense if you don't want to hand the game completely to the end user. Digital download dissolves the renting/used games market but it does not solve the piracy completely. With cloud storage there is nothing to steal/copy/share etc.
But if DD introduces its own problems due to the quality of internet then surely Cloud storage will not only share many of those but introduce much worse. We have been debating download caps but what happens when all the game info is streamed. It will quickly hit the cap when you streaming 2mbit streams of the game constantly for hours at a time vs simply downloading the game once. Not to mention what happens when more people come onto your cable node or even onto your modem in your house. The game experiance will greatly decrease. Then what about those who's console will use wifi , you'll have an even worse experiance. How about leaving the house. Sure its not portable but many people will bring systems to their summer homes or on vactation or to a friends house .
5. How long do you think it would take to download a full next generation game? Don't you think you will need bandwith to shorten the download time to a reasonable level? Instead, you can start playing by single click the same way you insert the disc and play.
I'd wager about 15 to 30 minutes for a next gen game. Developers will package and stream the games in the future so that the start of the game becomes playable . Off shot perhaps an hour .
What happens when your internet goes down. You may not be able to get new content on a DD only console but you simply can't play on your cloud console.
I am not arguing that next generation consoles will adapt this model completely but I predict that it will definitely happen sometime in future. The transition from download to stream has already started with music and movies and it is bound to happen for games too. The biggest question now is, how ubiquitous the high speed networks are? Are there enough people with such broad band connection? Is this population sufficient to sustain (economically) a cloud-storage based console?
I think the main diffrence right now is size and the fact that music has already gone through with the DD portion already.
With music for myself it takes about 5 seconds to download a song (perhaps less) it takes 3-5 minutes to play it back so there for bandwidth doesn't matter at all. Figuring every song at 3 minutes you will need 20 songs an hour. figuring 5megs per song your at 100 megs an hour. 2,400 megs a day. Higher quality movies still use DD . There are few 1080p streaming choices and those that exist like zune cache heavy portions of the movie
Maybe next generation consoles will be somewhere in between and accommodate all kinds of distribution systems (physical media/digital download/ cloud storage).
I think cloud is out for anything but the simpilest arcade games and at that point it may be smarter to simply download the game tobegin with.