More like 5 years. Physical gaimeng media will die with the end of this gen.

With the capacity of next gen blu ray tot 4k the space capacity and increased reading speed should provide at least ons more physical media console era.

The problem is Internet Data Caps that do exist and the unnecessarily large sizes of those games. ISP need to change, before digital gaming becomes a full fledge reality, given we could leap over this problem in theory with cloud gaming services. 

Lower the price of digital games to make up for the 30 bucks I can get on trading in games I'm done with, and I'll start buying digital.

That's because digital games are usually more expensive.

Digital is terrible imo. Why would I ever pay $60 for a game I will never physically own? I get free games on psn but if I find that same game Hella cheap I'll still pick it up. People still like old consoles and collecting the games. The day physical dissappear I might as well go to pc. :(

And I won't stop buying them. In fact I still buy physical even if it's $20 more (which it usually isn't).
The same with blu-ray, screw heavy compression and higher prices. 99% of the time it's cheaper to get them delivered to your door instead of buying a digital license from different providers.

I do use Netflix for tv shows, those box sets are expensive and I only watch them once anyway.

Quote from the OP:

"By the end of this year, global sales of console games delivered over the Internet, no disc required, are expected to hit $5.6 billion, up 14 percent from last year, according to PwC."

14% increase in just one year on consoles, i.e. despite popular belief console gamers are already and pretty quickly switching. Next gen the industry won't give gamers the choice anymore. Next gen games won't be inserted, they will be either downloaded or streamed, regardless of individual bandwidth limitations or data caps. It already works on PC, where within a few weeks after release on Steam 2.5 million gamers downloaded the 65GB of GTA V and more than 550.000 already downloaded the 35GB of The Witcher 3 (Steam alone, not counting its original platform GOG), it will easily work on consoles next gen. Game prices will probably be a bit lower on consoles next gen (if gamers are lucky), profits will be higher though than today. And in the end most console-only gamers will accept and even embrace any change, like they always did, see paywall for online play combined (to make it look like a bargain) with selected monthly "free" digital (aha!) games they never would have bought in the first place.

Pros and cons to each, but as a relatively inexpensive and very convenient means of consuming games, it's a difficult task to untether physical retail media from consoles as sales platforms.

Steps being made in that direction include tethering online services to hardware platforms, tethering individual user accounts to software purchased, regularly updated games (subscription passes) among others.

Many of the games currently being distributed wouldn't have a market in traditional retail space due to MSRP/production distribution inventory cost ratios.

Eventually, the primary consumers of retail media games will be collectors and traders (used game consumers) and the minority of unconnected players.

But as it stands, the proposition is often one of download a new game for $60 (convenience factor) vs. $60 for a physical copy. Most consumers are still very much attached to the idea that they are buying a copy of a game (that can be traded, loaned or sold) rather than a perpetual license to play a game.

Functionally, digital is superior. Physical copies have in effect become what PC games have decades ago: installation discs and security check measures. Retail games can be lost or damaged, must be stored and shuffled in and out of a console. This isn't an issue for digital licenses.

I'm glad that physical discs is still prominent. There's a lot of benefits to it over digital.