In some positive industry news, speaking with outlet Coelho, a Nintendo spokesperson has stated that "there’s no plans to ditch physical. We know how much the fans like it as well, so our position has been to be agnostic.”

https://nintendoeverything.com/nintendo-says-it-has-no-plans-to-ditch-physical-games-knows-how-much-fans-like-it/

Yeah, sure...

All three will eventually abandon physical.

But as the games getting bigger, how is a 256Gb built-in storage enough?

Nintendo dominates Japan and Japan loves physical. Go to any Hard Off/Book Off store and just aisles and aisles of games from any era as well as books and movies. Consoles. Old PCs whatever. Nintendo won't abandon that yet. The US may see less of them tho even from first party.

I didn't think they would. It would be leaving a lot of money and free advertising on the table.

A big chunk of Nintendo's revenue comes from the consumer gifting market. Parents who are gifting to children look more at the monetary value and physical nature of the product, rather than any inherent value (and most of the time, children don't know any better, other than, 'I got a gift worth X amount! Therefore I won't throw tantrums!'

It also helps that their products are given high shelf visibility at brick and mortar locations. That's passive zero-cost advertising.

Another advantage is Nintendo's proprietary media (game cards) which they sell to third party publishers as a means to sell their more highly priced software → instant revenue for Nintendo.

There is also the adult collector niche, which I know has several people on this forum who partake. And Sony has basically just handed that market almost exclusively to Nintendo. Even anti-Nintendo people who don't want to bite the bullet on console gaming have been changing their views on Nintendo as a result of this.

GKCs kinda signal though that they are heading in the direction of getting rid of physical, since GKCs are a halfway step towards that already. Next step will be release a digital-only model (this gen or next gen).