Actually I do live in a costal fantasy land (Manhattan) that is far beyond the curve of the rest of the country when it come to adoption rates of technology. Also part of what I do professionally is analyzing trends and strategy of digital content (primarily). So what I am saying is both my personal option but also trends I've been witnessing over the past few years. I should also say I've done work on various Sony projects over the years and have had access to their data and know some of their long range business plans. I'm not just some troll on a message board trying to start a fight.
I agree with both of you that digital distribution has issues; intellectual rights, redistribution, bandwidth and ownership are the four main ones it has to overcome. Without letting this thread snowball away from the original topic (trying to keep it related) I'll just reply to two of those points in both your comments above (digital distribution and broadband).
As for digital distribution... Apple has proven the model works and works well (even with the studios, labels and media distributors putting up roadblocks every step of the way), they have proven it over many years but two years ago with the introduction of the App store on the iPhone platform they showed it's possibilities. Also look at businesss that made their money dealing with physical formats for digital (or material that can be digital)e (i.e. big box stores, amazon, netflix, etc) and notice how all of them have adopted and shifted their business goals to said digital areas. Is digital distribution perfect right now? Nope, far from it. The issues are obvious and multiple as to why, but they will eventually get solved. Do digital versions of things work better than physical ones, often yes, often no (i.e. books are still better on paper, though I prefer reading on my kindle app on my iPhone)...
To Toronado's point on "You've got that backwards. It doesn't matter what Sony wants regarding digital distribution. What matters is if the people will accept it"... I disagree, so does most of the digital world/industries. The majority of users don't know any better or care, as long as they get what they want. Those who do care are either passionately for or against digital versions of things, but both are edge cases and far from the majority (though they are far more vocal). Apple/Sony/Microsoft/UMG/Universal, etc will decide what user's get. Scary? Yes in some ways but it's already happening. You can't stop it now. 10 years from now, other than edge cases, anything that is (can be) digital will be distributed as such. If you want a physical copy of it, you'll pay a premium for it.
To Foolkiller's point " can currently go to the store and buy a game quicker than I can download any digital version, especially the console games.".. Ok, I buy that, but you are the edge case here. I live in Manhattan, I have a 50mbps pipe that comes into my apartment which has no download cap and I can download easily at 5-50mpbs. I don't own a car and wouldn't even consider going to the store to buy something when I can download it faster (and cheaper). Much of Europe is in the same boat, as is all of Japan, Korea, Taiwan, Singapore, Hong Kong and much of coastal China. Broadband is still a perk in the USA (especially away from the costs) but in most of the rest of the world it's not, even the developing world (i.e. see recent press about the cables that recently plugged Africa into the global network, broadband is cheaper and more saturated in Rwanda now that it is in the USA, sad really).
I grew up in the middle of nowhere (literally, on a dirt road, in a state forest on a mountaintop in on of the most remote areas on the east coast). My mother still lives there and even she has a 3mbps capless connection to the internet allowing her to download (theoretically) a game quicker than it would take her to get in the car and drive the hour (one way) to the nearest best-buy to buy the thing.
Ever been to Japan? Singapore? Taiwan? On your handheld, wirelessly,e you have broadband faster than what most American's consider "fast".
When it comes to both broadband saturation and broadband speeds the USA is far far behind the global trends, in speed and cost.