One problem is the industry.
Although I'm merely speculating.. I'm sure there is lots of money to be made from the manufacture and distribution of software.
If you moved to a purely d/loaded system, there would be a lot of vested interests against you. That said though, you would drastically reduce the cost of gaming and therefore bring more people into your market (therefore making those unhappy people happy again).
The other thing I can see happening with a downloaded system is viruses. Naturally you will need a broadband connection: permanent IP address, permanently connected.
It's almost like a PC that you can attach to a TV though. I guess it will be optimised for gaming.
Sounds kinda cool if you can get it to work though.
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