Flash + today's development costs = $90-$120+ games. A dual layered bd costs about $3 @ 50gb'ish for $60 games. So tack on another $30-$60 depending on how big the game is. Good luck with that. (Don't forget deterioration, dust, failure rates, and all the other wonderful problems the industry was relieved to be rid of with the coming of cdrom.)
Again, not really seeing where people are getting that MS can't/wont use BD cause of Sony.
Digital isn't going to happen any time soon, if ever. The majority of the US still lacks broadband, to say nothing of the rest of the world outside of Western Europe & bits of Asia.
* And why would Sony group want to prevent MS from using bluray? That's just silly. They'll make their share of money off both the licensing & all the blurays folks buy. Just the same as dvd.