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I, too, was once a console gamer.

The root problem is copyright.
Physical media is just digital media on a disk.
On PC if you want physical games, you can just buy a cd and burn your game on it, unless the game has DRM.
But you can buy games on GoG with no DRM and burn them, except you can’t because DRM just enforces End User Liscence Agreements. You’ve agreed to the EULA, so the game still isn’t yours.
The problem is fundamentally that software is non-rivalrous, meaning it’s scarcity is artificial.

The reason you can’t own your digital games is because it’s scouts honor that you won’t just easily copy them infinitely and distribute them for free. It’s copyright that’s the problem. Games have a marginal cost of reproduction of 0. In a free market, the price of a good tends towards its marginal cost, meaning that in a free market, games would be free, but if games are free, no one makes money on making games.

Then the only game ever made would be indie passion projects and fans games.