Nintendo's next generation console will use physical media. I think there's a very large chance that either or both of the next PlayStation and Xbox do not have any physical option. So, if I had to place a bet right now, I'd bet that 10th generation consoles from Sony and Microsoft will be digital only.
The market very clearly prefers digital. We know that was 100% certainty based on the sales split. And, digital sales are much more profitable for the companies that get to decide whether physical media will continue to exist.
There is a small segment of the market that cares about physical media, but those people are mostly hardcore gamers that are not going to quit the gaming hobby over a change in the distribution system. There probably will be a marginal reduction in sales of games, all else being equal, when physical goes away. But, that will be a very small number. And it will be outweighed by the fact that most of the physical sales move to much higher profit digital sales.
TLDR: there is very little incentive for the platform holders to continue supporting physical media. And what little is left is declining every day.
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