It's going to go somewhere.
Think about it. You have Ebonite going on those TV shows (like How It's Made) with their "we can make a core every 7 seconds, 24 hours a day.
If they can't sell everything they make, they have to cut back on production. They didn't spend all that money on buildings and equipment to let it sit idle. Even when they aren't producing they are paying for utilities.
Or maybe they start producing less balls, and start increasing the number of new releases - as if they don't do it enough all ready!
Or maybe their engineers start tweaking the coverstock formulations so that they really do die after 60-100 games.
Either way, this speaks to nothing about the profits by the distributors. It doesn't prevent the distributors from selling to the e-tailers at a discount. It only means that the e-tailers can't sell below a certain level. It cuts into their profit margin.
And it certainly doesn't prevent the e-tailers from offering coupons and other discounts, or throwing in additional items (cleaners, inserts, towels, or other high-profit items) for free.