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Physical sales of FFXVI and the large majority of big budget software in general are indeed on a downward slope, there's no doubting that.

Luckily for publishers, digital gives them an even higher percentage of revenue per purchase so with the drop physical sales being offset by a rise in digital sales, it's only more profitable for a company like Square Enix. The brick-and-mortar stores functioning as middle men will get cut out, but are they even important when it comes to game development? I don't think so.