It depends on how long this generation lasts.
If it lasts only another 2 years or so before we get new systems, then the next generation will still be physical. This is what will happen if the people who believe that the relative power of gaming PCs is going to influence development trends are right.
If it lasts another 8 or so years (running at least as long as the Xbox 360/PS3 generation did), then the next generation will probably be digital only, especially because the current generations are pushing 'free games with your subscription!' so hard. This is what will happen if the people who believe that we have reached a point where technology is by and large 'good enough' for the average consumer are right.
I've got a feeling though, that the future isn't going to be consoles or even PCs exactly, but Netflix style 'pay a flat rate, play any game on our service!'. And the console wars are going to be replaced with 'which things are on which service/who has original content'. Exactly like with what we are seeing with HBO Now, Orange Is the New Black, etc. That is to say, streaming, with no regard for the device it's on.
Steam might well become that service, and maybe Playstation/Xbox will survive as services as well. Nintendo would become nothing but a Virtual Console company. Hardware-agnostic is probably the future.
I have enough physical games to survive and ignore that shift though
