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Just do family sharing on digital only games. Give people the option to install their physical games permanently and treat it like a digital game for family sharing, but the process would require a periodic online check just like before. At the same time those who don't want to install can use/lend/trade their discs without needing to be online just like now. It's the best of both worlds.

The point is to give people the CHOICE and show them exactly why digital is better. Don't try to force people into digital. You have to give clear benefits that outweigh physical media for people to choose digital.