“The digital distribution model is probably going to be extremely limited, and packaged products will likely rule for a long time. Digital downloads are not portable (you can’t take [them] over to your friend’s house), can’t be sold at garage sales, are limited to broadband households, and take up a disproportionate amount of disk space. I think that this will not approach more than 20% of the market for the next ten years or so.”

“I don’t think there are four million people in the world who really want to play online games every month,” said Michael Pachter, a research analyst for Wedbush Morgan, a securities firm.

“At the end of the day, we don’t play games for social interaction … We play games to escape.” Microsoft’s strategy is “absolutely flawed,” he said.