Every other media industry is moving away from physical - itunes, amazon prime, netflix, hulu, kindle, nook, etc. The difference is people are moving there willingly because of convenience.
My cousin has a 500+ bluray collection and several thousand CDs. You'll have to drag him kicking and screaming away from physical media, but he knows he's the exception.
I'm sure they'd love to get to a Steam like subscription model - Sony and Nintendo would too. But you can't force people there when they don't want to be and when some other options for them do exist.
Internet can't be the only place to buy hardware. If I were buying one of these on release day I'd probably preorder from The Exchange (if I could) or the Gamestop in East Liberty just because they're closest. If I thought I'd be able to buy one at Target on release day I'd maybe do that too. But I wouldn't want to order from Amazon. Its too difficult for me to arrange shipping and to actually be home to pick the thing up.
Plus believe it or not there are a lot of impulse game console purchases. I sold a lot of them when I was selling TVs. The PS3 was still considered the best bluray player when I started. One of the few we carried that could do 3D too. So no instead of just a new TV customer X was buying a PS3, extra controller, media remote, 3D glasses, and a game or two.
They need Walmart and Best Buy to have holiday bundles for Black Friday - those things were probably the only items we immediately sold out of, not the $199 40" tvs. If the rumor I heard that GameStop is done with Xbox preorders in store is true that would be really something. Just the fact a rumor like that can pick up steam shows how terribly this is being received.