Unless the network infrastructure across the country (USA Speaking) improves dramatically, digital only methods of distribution will cut off a MASSIVE chunk of the country due to either slow download speeds, data caps, or network reliability issues. I don't live in a major city. I live in the suburbs and pay $70 a month for a 40 megabit/s download speed. Earlier in the year, I purchased MLB The Show 13 digitally because one, I buy the game every year and the trade-in value after the next year's version is announced is pathetic, and two, because of the fact that I won't be trading it in I have no issues with just deleting it when the next version comes out. Still, it took 8 hours to download the game which had a file size of about 22 gb. HDD are not reliable. Over time, all of them will fail. I would hate to imagine what it would be like if I had a large collection of games on a hard drive that failed, and then had to spend days to redownload everything in order to play them again. There's also the worry that someday in the future, if a company folds or they change their minds about a game, that the software won't be available for redownload. This has happened before and there is nothing to stop it from happening again. If you have a physical disc, it doesn't matter. You can just put that game in and still play. If the download is made unavailable for you, then you are SOL and will never be able to play that game ever again.
Another benefit to having the discs is that I can keep my games in a cabinet and see what it is that I have. Just like with my massive DVD/Blu-Ray collection, one day I might walk by the cabinet and see a game/movie in there that I had forgotten about and pop it in again. That can't happen if it's all digital as the only reason I'd turn my console on would be if I wanted to play a specific game. So I wouldn't be able to have that casual "oh, I forgot about this game. I'll play it now" moment.
Another person in this thread mentioned the use of emulation. Although processing power is still increasing, I don't think it's increasing at the same insane rate that it was ten-15 years ago. Consoles like the PS1, NES, SNES, etc. are able to be emulated well due to a combination of weak processing power of the original consoles, and much greater processing power of the current computers we have out there. More recent consoles are FAR more powerful and make use of more complex and heavier encryption which makes emulation even more difficult. Looking at our current generation of consoles, I just cannot see a PC powerful enough to fully emulate these games in my lifetime. We are reaching a limit to how powerful our PCs can get based upon how pure silicon can be refined and how reliable the components can be. (Sure, we could possibly get insanely powerful processors created in the future, but how reliable will those processors be when their ability to be that powerful relies on completely perfect and stable physical structures?)
The other thing we need to keep in mind is that the current state of emulation is possible because the actual game data is on a physical medium. There is a disc or a cartridge ROM that can be read and used to help develop the emulator itself. With full, 100% digital distribution, there is no way to have the physical copy of the data to use unless you are able to decrypt the hard drive that it is stored on. I don't see Sony or MS giving away the encryption keys, nor do I see enough people out there with the capability to do the full decryption and also have access to all games that have been released.
The biggest issues with digital downloads is that unlike a physical media where copies of the media can still be found decades after the production of it stopped, with digital distribution the ability to obtain the media stops the second the distributor turns off their server. As a result, a great deal of gaming history can be lost in an instant with zero way to ever get it back. I like the idea that right now, I can sit down with my little nephew and show him the videogames I played as a kid, whether that's by firing up the old console or firing up an emulator. If we go to a DD only process, he will NEVER be able to do that with his own kids or nephews in the future. THAT is frightening to me.