Why not make a whole full-size game downloadable on XBL?

Even though Xbox360 (currently) has only a 20GB hard drive

13GB- the 20GB number is just their for PR purposes apparently(you can only use 12GB out of the box). That would be the best reason I can think of why DLing games is not going to work. I already have a GB worth of save games and arcade DLs between myself and my kids- and I bought my 360 after Oblivion went gold. If MS was seriously considering this, they would have went with ~100GB or so HD. I could fit, at most, two games on my HD- I randomly walk into EB and walk out with that(last week it was TR and FC).

So DL a couple of games over the course of five- twenty hours or so each(XBL is very slow on anything remotely popular- two hours per GB on the really hot titles at peak time- this would likely get much worse with this method of distribution) and then have to delete one and spend another twenty hours to DL another game only to change your mind and want the other game back so you have to spend another 5-20 hours to re DL that again- sounds like real fun. Then of course you have to deal with the poorest quality HDs ever seen for mass market distribution. Between myself and a couple of my friends we have been through five HDs to date. MS does a good job of getting out a new one fairly quickly, but we all now have had to buy mem cards just to back up our save games on a regular basis. It took me several hours just to re DL the ~400MBs worth of arcade titles that I have on my HD.
 
20gb 2.5" HD. 7gb is reserved for game caching. 13gb remaining. Possibly upgradable, but will only use FAT32 partitions.

I have 4MB cable. I think 3MB+ is fairly common

Broadband technology is booming, not the fast speeds. The majority of people are on entry-level tiers, ie 128k-1mb cable or dsl. Don't forget monthly bandwidth limitations.

While some people may like the idea, it just doesn't work too well on the overall picture.
 
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