"Why would anyone give up shelf space for just a 1% margin?"
What are they going to sell instead? GME in particular. If they said tomorrow, "We're protesting by not selling hardware", the revenue would crater and eps would crash also due to fewer software and accessories sales to new customers. Sure the platform holders still need GME and others, but don't kid yourself, those retailers desperately need the platform holders.
"Digital distribution for these type of games are a long ways away."
Actually you can log on right now and download them from PSN and Live. Like, today.
"The numbers at this stage are immaterial."
I wouldn't say 10% is immaterial. Anyway, are you talking 10% digital sales on games which were released to retail first? So those games weren't available until after, what, 50% of the games units had already sold, and so digital took 20% of the remainder? That's not immaterial either.
You make some valid points about ownership and resell value of $60 games.
As for the digital argument, you surely must see it's a trend?
- The trend of GME adding stores can't last forever, and that's been a big factor in their eps growth. I have 10 GME stores within 10 miles, how many more can they add without cannibalizing each others sales?
- The trend of more games becoming available on digital.
- The trend of digital taking a larger and larger cut of total sales.
Follow the trend lines and where do you end up? Do you think those are suddenly going to flatten out or reverse? Not a chance.