Living in Japan, I don't see physical media disapearing anytime soon...
Even though Japanese laws forbid stores of having video game rental sections, movie DVDs and music CDs rental shops as a whole (believe it or not) are as strong as ever.
Besides, shops that sell used stuff (not just video games, but also books, movies, music, electronics and clothes) like Book Off, Hard Off and Geo are among the largest retailer chains in the country.
Japanese (maybe the companies even more than the consumers, as can be attested by Nintendo's conservative approach to online services) are not very prone to change and, believe it or not, there still is a large chunk of Japanese teenagers and young adults who don't even know what Netflix is (as a university teacher, I can confirm that).
Most of the entertainment market in Japan is based on physical media and, as soon as Japan keeps being relevant in the video game industry, I don't see physical media being discontinued in the near future.