I just wish Nintendo released their modern AND classic games through one time purchases to eShop, instead of us having to subscribe to their classic library.

well maybe thats changed in light of this announcement. microsoft could very well win a sizeable part of the market if they maintained physical releases for their next console. they wouldnt even necessarily have to "go big" on it. i think they should (obviously), but maybe all it would take is keeping that option available. i dont think a strong focus on gamepass has to preclude them from offering physical content over the next generation.

oh man i hate that shit so bad. im with you 100%

If i was MS Id reprupose the poprietary SSD port thing, stick 4 of them in the front, and offer physical that way, we might have a home run.

that is, if MS was actually interested in going physical...

At least the Mario Galaxy duology is available on eShop without a subscription, as are many classic Nintendo arcade games like Donkey Kong and Punch-Out, but they should have either kept doing individual eShop releases of their classic games or at least compilations of them available on eShop. Would prevent a lot of piracy that way.

So like Switch game cards but even smaller?

They can, yes, but:

1. It's another obstacle, especially for people who don't want to spend hundreds of dollars for something to be delivered by mail. Lots of people like doing expensive purchases in person.
2. The presence of items on store shelves increases demand for the item, since it effectively works as a combined advertisement and endorsement of said item.
3. Casuals are less likely to even know a new console and/or games are out, let alone that they should buy it.
4. Game and tech demos at stores, a traditional way of selling new stuff, stops being viable when people can't buy said product there.
5. Stores have historically teamed up with hardware manufacturers and publishers to promote hardware and software. 

^This. I hate having to pay for shipping, so I try buying things in person.

Dark day for gaming.

The recent case of digitally purchased movies being revoked demonstrates the downsides of an all digital market.

The issue for MS is that Gamepass has created the decline of physical on their own platforms, especially in light of day 1 first party titles. They have conditioned their user base to go digital over physical, and been doing so for years now. When you factor in that sales split for physical to digital on playstation is about 1:4 and only trending up for digital, even Sony is seeing a massive digital only consumer base.

Take the recent news from Capcom where 90%+ comes from digital, and Take 2 about to drop the biggest game of the gen as digital only. 

There's no sizeable market for MS to gain if you ask me. We're not in the early years of the PS4 anymore.