In my opinion it will happen next gen or the one after. Digital distribution is the big thing right now. What will most likely happen is within the next two console generations they will start going more and more digital with no more physical games.
If they do decide to go digital then that would ruin the ability to "barrow" friends games. I heavily dislike digital distribution because of this. Me and my friend don't play games online so we just buy games both of us like so we can play more games. This would ruin the ability and would heavily make it more difficult for me to play many games.
If full digital distribution happen I would hope that a general price drop would happen on games since there is no longer a factory line to create the games, but that probably wont happen since people get greedy.
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