Physical media in any form (I doubt optical discs will go on for much longer, their drawbacks just keep getting bigger) will certainly survive for different reasons.
First, it gives the console manufacturers critical shelve space in shops. A digital only console tends to get glossed over without a selection of games close by, especially by parents looking for a gaming device for their kids.
Second, as much as audiophile persons saved CDs and Vinyl Records, Collectors will make sure physical versions keep having a market and won't be just for shelve space. In fact, it might be possible that the collector's editions will become the standard physical edition if mostly everyone else just buys digital. Thus bringing us back to the PC cardboard game boxes with lots of feelies in their standard versions from the 80's and early 90's.
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