u/HairyTeef

As far as publishers are concerned, the single greatest cancer they face is the resale market. When a store sells a new game for £60, the publisher makes about £20, and the store gets between £15-20, depending on how they choose to price it. The rest is the cost of manufacturing and shipping. (These are rounded estimates, it varies)

Then, a week later, when someone trades that game in and the store resells it for £40, they get all of that, and the publisher gets nothing.

From the publishers perspective, that’s basically theft, which is why they’ve been trying for decades to put a stop to it, which they can’t, or at least make more money from secondary sales. I'm sure some of you remember EA's awful "Online Pass" which charged second-hand buyers £10 to access online features. This was hugely unpopular, and was eventually cancelled, but it does live on in boxed games having single-use codes for "Bonus" content, which often feels like "Core" content, which second-hand buyers will have to shell out for to access.

So that’s what getting rid of physical media is all about. If they get rid of the discs and cartridges, that market vanishes. From the perspective of the publishers, if there's even a small conversion from second-hand to retail or PSN purchasers, that represents a huge win as they will be getting their cut of every sale.

Please don’t mistake this explanation as an excuse. All of the platform holders have had the means to kill off the retail market and usher customers onto their digital storefronts for at least a decade. All they had to do was pass on even a fraction of the savings they make selling digitally, which cuts out the manufacturing, shipping, and retailer costs, onto the customer. But they haven’t. Games cost the same on the Playstation Store as they do on the Gamestop Shelf. Sometimes more!

It also reminds me of the anti-piracy mindset companies tend to have, which imagine that every pirated copy represents a lost sale, which is far from the truth. In the case of both piracy and second-hand sales, the lower cost encourages people to try out new titles they may otherwise have ignored, which can, counterintuitively, lead to an increase in future sales.

I'm surprised the DF crew barely mentioned any of this, as it seems like the single biggest reason for the move, especially given the fact that Sony have confirmed they'll still be selling games in physical stores. This move has been largely criticised as an attempt to kill off the retail market, but I don't think that's the case, in fact, the problem John mentioned regarding not being able to find games on store shelves may, ironically, be alleviated by this move, as Sony and other publishers manufacture and ship increased numbers of "Boxes" happy in the knowledge that those sales wont contribute to the second-hand market.