I'm a slave to materialism, so I like the idea of owning physical games, and I like building nice little game collections. Not to the point where I'll dismiss downloads if they offer a better deal. Unfortunately at the moment, my internet really struggles downloading massive files (especially considering games are pushing 20GB or more nowadays). It's not slow, but with 6 or 7 devices all connected at once it drops signals every now and again, which usually gives me some kind of error message. Combine that with not wanting to keep a system turned on for all of the hours of a day and digital distribution is still just not convenient enough.
Not when there's three game shops within ten minutes walk of where I live, and Amazon, which despite a few days delay, sells most things cheaper than they would be on download stores. Plus there's the fact I can borrow/ lend physical games around amongst my friends. So I don't think there's much need to abandon physical games yet. Not for a long while.
In fact I think physical games will exist in a similar position to CDs. They might not sell as much as downloads any more, but they're still with us. And it looks like they will be for years. So for games, we might have digital distribution as the norm in future, but physical copies could still hang around indefinitely.