Ps3 – Playstation Online Store & D.M.R.ights

IMO The main reasons are

• High profile AAA titles (like GT5) are very large and even with fast internet speeds would take a long time to download and put huge strain on the PSN infrastructure, as potentially millions of people would want to download it at once. Smaller indie and older titles are not so big and dont have the same huge release day pressure on the network.

• Sony controls the PSN Store, has various rules in place and take a cut, publishers want to control their own releases and already have contracts in place with game stores to sell the physical media.

• It is surprising how few people are tech savvy enough to use something like PSN properly as opposed to picking up a game from the shops, especially if it is a present or the purchaser is under legal age to perform online transactions. So there is still a higher demand for physical media (with the exception of small titles where the price and quantities doesnt justify this).

It is possible (and probable in the coming years) for them to go more the steam route (with pre downloads etc) but the console market is not structured around that sort of thing at present.

You've got your definitions of "compressed" crossed. I'm almost certain the games are compressed in some way so that the PSN can send as little data as possible, but these would be lossless compression methods (almost everything sent via the net is compressed in some way or another, non-media files are almost always compressed losslessly). And at the same time, in-game assets like graphics, video and music are compressed because the raw files from which they're made are far far too large to fit on even blu ray disks (or if they could, load times would be beyond unbearable).

As for the question of quality, no, digitally downloaded games do not differ in quality whatsoever. The graphics, audio and video that you'll see on a downloaded title are identical to what you'd see on a disc. There is no quality related reason to prefer digital or physical media releases for PS3 games. I own several dozen digital PS3 games now and there's no noteworthy differences (besides the loading speeds, which are superior, and the storage requirements).