Technology
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Yeah, but like all consoles since the 360 and the PS3 had the capability of copying a game disc to the internal storage in order to have faster operation speeds.
All they would really need to do with this is have it so the system copies the game to the drive like it does currently with most physicals, and then the USB drive would be used as a key or honestly they could even just leave it so you don't need the USB drive hooked up
Relistically, this could probably even work in video games favor because flash drives would be smaller than their DVD counterparts and would be easier to break and also would have shorter lifespans.
Well even 64GB microSD cards are $35 now.
There's a price floor to this kind of thing, and no cheaper read only tech has come to replace BDs.