The problem is not so much in digital downloads, but different price structures. There is a difference between downloading an album at perhaps a couple of hunderd megs and a game at a couple of dozen gigs. If you were to go down a digital and a physical release then any price difference should only be slight say no more than £5/€5/$5 etc.. Any more than that and you are in effect penalising people based on where they live. Not everyone has superfast broadband or even broadband some are still on dial-up.
How does Steam do it then? I've seen games that are on console for $60 sell as low as $10-$20 on Steam. If its all digital distribution and no brick and mortar operation to support, how can it not be cheaper? Console manufacturers get a royalty already so they should be set.