He's wrong in that physical media will exist for years to come. Some people like disks, others like to buy them as gifts... there are several reasons to keep physical disks afloat for a long time. Besides, what is it going to cost MS/Sony to put a BD player in their next console? $5-7? There's no point in NOT putting one into the system. It makes it a more functional unit that better fits the living room lifestyle of many people.
The key difference is that developers will stop focusing on brick & mortar stores so much and will push digital sales more rigorously. Profits are higher, there is no backstock/inventory, changes can be made on the fly, and the customer can impulse buy something from their couch.
Hardware will always exist and it will always be branded by MS/Sony/Ninty. But what will probably happen is that we'll hit a hardware ceiling (we already have in many cases) which forces developers to hold back how good they can make a game in favor of keeping the budget moderate so they don't have to sell 14 million copies to turn a profit on the game. When that happens, hardware will stagnate and at that point, we'll see less Xbox 360/PS3-type hardware and something that is more flexible and cheap, like an AppleTV that gets small hardware updates once every year or two but is just called "AppleTV" as a platform, not a specific device.
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