The real problem for download only purchases vs. physical is that it directly competes with the old fashioned brick and mortar outlets, which last I heard still accounts for the lion's share of revenue for triple-A game releases. To date, few publishers are willing to undercut the likes of Gamestop and risk damaging what is still a reasonably profitable relationship and loosing most of their income if those shops decide to cease stocking their product.
Granted those same shops really take the piss by making *huge* profits by actively pushing trade-ins and used game sales, which makes it a bit of an abusive relationship when you think about it. Even more so since the publishers seem intent of passing this abuse along to their customers.
I must admit that I'm at a bit of a loss as to why they haven't partnered up with the likes of Amazon as an alternative to in store sales. I mean it would seem the logical compromise as their business model allows for lower price points and yet the customer still gets a physical product rather than a code for a digital service that may or may not evaporate a few years down the line.