I do believe that disc based games will disappear in the future, but probably not completely with the PS4. The reason the industry will be moving away from discs is due to game sharing. Already, technology is being suggested that will restrict a disc from being used more than once. The obvious ramifications to this will be the impact on game re-sellers such as Amazon.com. But I hardly think that the game developers are worried about Amazon's profit margin.
Theoretically, the way downloaded games work through the PSN store could work for any game provided the storage capacity is adequate. And I don't mean capacity for one game. There are people who own hundreds of games. That can be resolved by either making a console HD with adequate capacity for as many games as a user may own, or provide some sort of web storage capability. Sony has already made some steps in both directions, with the PS plus backup service and the ultra slim 500gb PS3. Some have suggested that by moving to a 100% account specific downloading system, would enable developers to reduce prices because software piracy would be all but eliminated. Even if that objective were to be achieved, it remains to be seen whether customers would actually see price drop.
I am not totally opposed to downloaded games, but when I spend $60.00 or more on a game, I would like to have a hard copy available.
I do not think the full potential of Blue Ray gaming has been met.
First of all I never suggested the PS4 be download only. I'm only saying the PS4 should switch from using discs to memory cards which will offer much faster load speeds and eliminate the need to install games on your hard drive.
Secondly, I think Blu-ray has reached it's limit in regards for gaming. It's slow read speeds meant it was probably never suited for gaming. Load times will likely only get worse on next-gen consoles because they will need more data for a smaller amount of content.
Sorry for the misinterpretation of the OP suggestion.
As far as Blue-ray; you honestly think graphics and sound cannot get any better for gaming?
All be it, true, load time will probably increase as a result. Perhaps in my misinterpretation of your OP, I did not take into consideration, the increased speed the memory cards would bring to the table. That being said, I would hope the cost of the games released would stay the same, if not go down in cost, due to the hypothesized necessity for the added cost of the cards.
Inevitably, I am sure Sony will not disappoint, and have its typical; bugs, hardware shortages, firmware flaws, and overall mishandling of the next console release, that we have all come to know and expect.