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There will be both

The digital market will overtake the physical market but both will be there. Look at the music & movie industry.

Digital sales trash physical sales for music but CD's are still around.
People rent / stream movies via On Demand, Netflix, and so on. Yet, DVD's are still kicking.

My guess is that next-gen we'll see two consoles from Sony & Microsoft. One will have the ability to play physical games like it's been while the other is all digital. You will have a choice.

Nintendo will likely stay with a traditional console next-gen. They are always late with these types of things. (Before anyone jumps my case, I never said this was bad)