"Games On Demand" for Xbox 360

Whitten announced "Games On Demand" for Xbox 360, a feature launching this August that will allow users to download full retail games to the console's hard drive. Whitten called the the feature a "natural progression" of Xbox Live's current offerings. The service will launch initially with 30 games, including titles such as Mass Effect, BioShock, Assassin's Creed, Crackdown, Oblivion and Call of Duty 2. Prices will be in line with physical retail, and new games will be added regularly.
http://www.gamasutra.com/php-bin/news_index.php?story=23865

Okay so impressive and cool and all, especially since a number of Australian ISPs offer free traffic to XBox live (go Westnet!), but what will happen when gamers who are fed up with gaming stores start downloading games rather then going out to buy them and drive the traffic up?

There are already full games on the xbox live system, not just arcade fun ones but 4/5gb monsters. "Classic" games from the first xbox, I've got a few like Max Payne and Halo 1, but I doubt they'd even come close to the amount of traffic a new game like Assassins Creed 2 would generate release day.

Will we see ISPs drop Xbox live traffic from the free list? I know if I had to download an 8gb game and effectively pay for it twice I'd think twice, that's the reason I bit the bullet and went into town to buy my copy of warhammer online (bad investment, I played for a month before uninstalling it) rather then just download it like I wanted to as I hate my local game store and only go there when forced, like in that case.

I doubt the ISPs will drop it, free content like the xbox live stuff actually costs them less then a lot of stuff we download as its mirrored locally, I wont get into the details as its a pain in the ass to explain and frankly I can't be bothered, but by steering users to free traffic ISPs save money.

The price of the downloads is another thing to consider, currently we Australian's are royally ass raped (I don't like to use that term, but it really applies here) by game prices, check out the difference of Fallout 3 in AU $109AUD and US $56.99US (roughly $70AUD) so we pay a whopping $40 more then people in the US, yes you could argue we are a smaller market and there are fright costs, but when you start talking about online content those arguments drop away very very quickly, so if we pay even the difference you're going to see a lot of very happy Australians.

Another issue I see with this is the insane prices of xbox hard drives, you can buy a 1TB drive for less then an official Microsoft 120gb drive, that's just pathetic, there is no difference at all between them, and games now days take up a lot of space, I've got an 80gb hard drive in mine and I've already burnt 50gb of that on installs and downloads without even trying, so unless they drop the prices to a reasonable level, they are going to have a hard time selling this in some markets.

Though personally if the game price drops I'll likely just delete games as I'm done with them and redownload them later, if the system is like the xbox live current system which remembers what you've paid for and lets you grab as many times as you want. After all my xbox downloads content off the Microsoft servers at my full 8mb connection and 10gb at that speed takes only a few hours.

That's not even taking into account the game stores reactions... but frankly I don't give a shit about them, smelly dicks conning people into buying shit they don't need.

All in all, interesting news but not enough details to really go into it.