I honestly don't understand why someone would want to have to manage the storage of a physical game collection when they can just have their games all on their console, especially in Tokyo where space is at a premium and there isn't much of a market for used games. The games don't even run off the disc anymore, they just get installed to the SSD and then the disc and case become an unwieldy DRM key. I went all digital once PS4 dropped and never looked back. So happy I did. In the PS3 era I was fervently pro-disc to save HDD space, and then Devil May Cry 4 came out and required a full install on the HDD. I also still have my huge PS3 game disc collection in a couple storage bins while my PS4 game collection is ready to play at the drop of a hat.
Simple. Ownership. Have your read the ToS of any account you have?
You don't own any of your accounts. An online storefront can lock you out of thousands of dollars of purchases for any reason they see fit. Seriously, the ToS state that they don't really need a reason at all and aren't even obliged to tell you why they banned you.
I don't know about you but I don't want my entire collection depending on an account I have zero control over.
Furthermore, physical pricing is MUCH more competitive. A digital game can hold a high value for much longer. To the point that I'm shocked at how much some of these games cost, when I can find a physical version that's $20-$30 cheaper.
Also, games not being on disc is an xbox only issue. Due to their "smart delivery" only the xone version is on the disc, with a licence for the Series X version. That's why even with a Series X disc, you still have to download the entire game.
PS5 has no such issue. All PS5 games are fully on the disc. No internet connection required. Put the disc in, install and have a fully playable game that you get to keep regardless of what happens to your account or the digital storefront itself.
And yes, 99% of games are completely playable without a day 1 patch.