Nintendo went with physical because they make money selling their blank, proprietary cartridges to publishers. They then make money when they take their cut of each sale of a game. And, on top of that, they force publishers to price their digital versions the same as the physical copies.
It's the ultimate double-dip, with a side of price-fixing.
Nintendo isn't the savior of anything but themselves. If digital was more profitable, they'd have done it. But they have quite a little scheme going on right now, and with their exclusivity and their fanatics gobbling the games up, they have cornered their part of the market.
There are other practical reasons as well. Pretty smart from a business standpoint, can't say it's really great for consumers though.
Edit:
Link to article explaining it.
Anyway, Nintendo is actively overcharging you. They don't give a fuuuuuuuck about you or your options.
Here's a dirty little secret about the Nintendo Switch: Nintendo actually makes some money from the manufacturing of its proprietary cartridges, along with the licensing agreements companies must enter to create games for the system. Not only that, but Nintendo also requires publishers to price their digital games the same as their retail versions. So if a publisher charges more for a cart-based version of a game, the eShop version has to sit at that same price point — and Nintendo makes more on the digital sale as a result.
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As cheap as flash storage is these days, it's still not as cost effective as manufacturing a Blu-Ray disc. This makes developing for the Switch a little more expensive than it is for other consoles, and explains why some Switch games sit at a higher price point than their Xbox One or PlayStation 4 counterparts.
TL;DR (*edit: not really):
- Nintendo makes money selling blank catridges to publishers. Profit for Nintendo, loss for publishers/developers.
- Nintendo makes money [again of the sale of cartridges] when those publishers sell games to you. Another profit for Nintendo, loss for publisher/developer.
- Nintendo forces publishers to price-fix their game so their digital versions (that should be cheaper) stay at the same price as their physical games (which are more expensive). Loss for consumer.
- Nintendo could have gone with optical storage which would have been inexpensive relative to flash storage, but the profit (see above points) potential was too high with cartridges to do that, which is why you see old Nintendo games still at high prices. Loss for consumer, also publishers/developer.
- It's cheaper for them to build a console without an optical disc drive and to go with cartridges, but more expensive for you the consumer to buy cartridges for that console. Of course, they could have emphasized digital which would have been cheaper than BOTH physical options (disc or cartridge) but...money.
In summary, Nintendo is a perfect example of why physical is terrible for consumers and developers.
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