Sorry... most analysts are basing the threat to companies like GME and NFLX without considering several factors: 1) cost of hard drives (especially true for X-box et al) $100 bucks buys you capacity for 5-6 games IIRC, unless you see a decrease in game price it costs a LOT more 2) Line speeds (2-10 hours for a download, or go to the store) 3) Game size (games are getting bigger, if they start filling Blu-Rays you can multiply size by 5, which increases hard drive cost and download time).
Game companies may try the download model, but I have a feeling many people will just buy the game in store if there isn't much of a price advantage.
Your assessment is not accurate on downloads. In addition you are not considering the virtual game model (thin client) There is also the "Second Life" virtual worlds gaining more and more popularity. These are all factors that are signalling the top of the GME market. Just like the music and movie industry ,the game market distribution is about to change.