Gaming is moving ever closer to the digital age. PC gaming is already pretty much there thanks to Steam and Origin but console gaming is catching up. Nintendo are promising digital versions of their games to be released alongside the physical versions of their games. All three companies seem to be progressing their digital strategy with Sony even being rumoured to be partnering with a cloud gaming service such as OnLive or Gaikai. Eventually physical games will likely be done away all together.
The future is all well and good but there are some seriously negative effects that will come from this. First of all this will kill off the used game market. There will be no games to trade in and so no used games to sell. As such less games will sell, they will be less popular, which will hurt developers, and retailers will struggle and as a result will close. The entire industry will be effected by the console developer's short sighted-ness and as such games developers will have less of an audience for their games and shops will close. Thousands will lose their jobs.
This will also mean that games can only be purchased from the console's online stores which will mean they can afford to charge pretty much whatever they like, which at the moment, for Sony at least, is £50, which is ridiculous. This will further harm the games industry. In short, things don't look good for games sales.
The other problems are that you won't be able to lend games to your friends or family, how many times have you lent someone a game? How many times has someone lent you a game? On top of this you will also need a good Internet connection to be able to download games within an acceptable time frame, this isn't a problem for most people but for some it will be and it isn't fair that they should miss out.