^Yup, I said that a while ago. The "hard media" will be phased out. Devs obviously hate the used market and what better way to kill it than going all digital? The only thing is they (again, obviously) don't have a way to make the digital downloads cheaper.
Example: The Mass Effect games, both 1 and 2 are on XBLMP and the second one is up for download on PSN... however, both 1 and 2 are 19.99 on XBL and 59.99 on PSN. They aren't willing to take a loss on digital game prices.
When games all become digital (I agree, probably in 5 years) they will need to be around 29.99... or at most, 40 (new) and 14.99 for older games. People won't want to spend 60 bucks on a game when they won't be purchasing a hard copy.
I believe they'll be able to do it and I'm not sure what I think. One way I like it because I have a bad habit of trading in a game then repurchasing it later on down the line. If it's all digital I won't be able to do that (Unless gamestop figures out a legal way to do digital trades, lol). On the other hand I won't OWN the game I buy, I'll simply own the right to play it.