That still makes no sense for the publisher. 

Packaging + shipping + retailer cut is still going to be about $15 dollars, then the cartridge itself while far cheaper than the N64 days is still likely at least about $7 or $8 a pop. Digital is simply better for everyone. 

Nintendo basically knows this too, the Game Key Card option is there because they basically expect all/most 3rd parties to just use that option. 

3rd party games being sold on Nintendo platforms digitally = more money for Nintendo at a 30% cut. Of course they will want that too. That's another reason for Nintendo to want better 3rd party relations in general too in the digital age not only do they get their standard licensing fee cut, they take what Wal-Mart/Game Stop/Target/Best Buy etc. would take as their cut too. That's great for Nintendo, 3rd party sales are more lucrative all of the sudden. Fantastic. 

Honestly Nintendo should have just ditched physical entirely and gotten this whole process over with, the current setup is a bit silly and stupid for all parties involved. There's not going to be very many Switch 2 games on an actual cartridge, almost all the 3rd party ones will be on a Game Key Card. Nintendo's doing the bare minimum for people who want some physical games, but even Nintendo knows deep down, digital only is far better for them as a business. They will make a lot more money when Switch's ecosystem gets forced (basically) into being more digital and eventually digital only (Switch 3 probably). 

I'll like to add that as someone who lives in the UK but also is from an upcoming developing country (Zambia) where Switch's were being sold digital was the only realistic way to purchase so the is the aspect of opening up markets in new regions.

And personally I like physical games, but honestly once I'm playing a game I give zero fucks if its digital or physical, it's about the game not the format. 

Digital is just a way, way better business model for both the platform holder (Nintendo, Sony, MS) and the 3rd party publishers too. It just is what it is. 

It's inevitable that it will take over and pretty much replace physical, make your peace with that now. 

I don't think your maths holds up when Marvelous are shipping their games on game cards.

The game-key card probably exists because Nintendo was aware of how many fake physical games there were on Switch. What a game-key card does is turn a digital game into something with actual ownership, meaning that a game-key card can be sold by consumers if they don't like it, unlike digital games which cannot be resold. Nintendo cannot force publishers to make physical games, but the game-key card at least provides more rights to Nintendo's customers. Or in other words, the absence of game-key cards wouldn't have increased the amount of physical games but the amount of codes in a box.

I am sure that Nintendo knows that aiming for the highest volume of games sold is more profitable than aiming for the highest margin per game sold. That's why Nintendo keeps publishing physical games, because they know that their game sales and thus their profits would decrease significantly by going digital-only. The proportion of physical game sales for games that are available in both physical and digital format still accounted for ~70% late in Switch's lifecycle. Your suggestion that Nintendo should gone digital-only with Switch 2 is plain stupid.

I'm surprised GTA V wasn't announced for Switch 2 yet.

But if it comes I can see it using a game-key instead of 64 GB card, as this game with all Online DLC's wouldn't even fit on 64 GB card.

Im surprised it was never announced for the Switch 1...

Well. Noone is going to have to worry about games at the 90 price point.

Yes me too, but Online with a decade worth of DLC was too heavy on CPU and memory for Switch 1.

I thought it was a given for Switch 2 Direct though.

Oof, those are some very weak arguments. Unfortunately, they are used all so often from pirates.

1) Who is the one doing the shady illegal things here, tell me. Are you really trying to put the blame on them?

2) It doesn't hurt them, so it's fine, right? Wrong. It's still illegal. No debate.

And for completions' sake, I'll give the last major argument right away: pirates only pirate games that they own already, of course. They have NOOOOOOO intention of stealing, sir. None at all.

We really don't need to debate that one, do we? In the case of NS2, a console that's not even out yet. There are zero reasons why you should want to pirate a game you already own. If you own it already then why not just play it right away? Why the hassle? I think it's crystal clear that this is even the weakest argument of them all.

Sorry for being very blunt about this. I just can't watch someone weasel their way into tolerating something illegal, in this case theft. Pirates grab every straw they can to justify their bad behaviors and they should be called out for that.

You're downplaying the benefits of physical media. With physical copies available there's no risk of a game no longer being available due to being delisted or people no longer being able to play a game cause the digital license was revoked from their accounts. Digital only works well enough on PC but it's a big issue for consoles due to their nature of being walled off gardens with DRM and a single storefront.

Like Forza Horizon 5 just released on the PS5 but it's digital only on there and that means that after it gets delisted in a few years then the only way to play it on Playstation will be to buy a used console that has it while Xbox One or Xbox Series X owners will just need to buy a used physical copy to play it in the future whereas PC gamers will still be able to access it through other means.