Physical games/and or their original hardware will eventually stop working due to wear an tear, time and/or the exposure to the elements. It's inevitable. Sure, it will take dozens of years since the product is released for that to happen. That's why I, on a personal level, like to own physical copies and old consoles: they will probably be in a working state for most, if not my entire life.
But for preservation sake? Like... Talking 50, 100 or even 500 years from now? Physical will not cut it. We may have the actual boxes, consoles and disc/carts for display (and that in itself is somewhat interesting to have) but their working parts will not work. People from the future won't be able to grab a Wii and a copy of Twilight Princess from a museum and play. If we depend just on physical, people won't he able to experience games from the past.
Digital media is extremely important for the conservation of video games, because it's the only way in which a game (digital copy) and a system (emulator) can live pretty much forever. Once a game is uploaded to the internet, it's preserved forever. Be it 50, 500 or a 1000 years old (unless we go extint and/or the planet blows up before that).
And that's just the time factor. Let's talk about how game publishers are a menace to game preservation. We have seen cases of old games not being re-relased in any shape or form. We have seen publishers sitting under completely finished games and/or translations that either take decades to see the light of day or just never happen. We have seen publishers change certain aspects of their original games (being graphics, music, dialogue, story, etc) in the newer and accessible versions. We have seen publishers outright take down full games from their storefront forever.
Physical games won't help in the long run in these cases. We either won't have a physical version at all or we will only have access to the official changed/censored copy. Only by having the digital versions (all of them in case of different iterations of the same game) we can keep playing and preserve the knowledge of how some games originally were.
As I said, physical only will doom video game history. Digital copies are the key to preserve this medium (and many others like cinema, literature and many more).
