In all honesty, games will/should eventually have most/only downloadable software. However, physical copies of games just have a comfort and lovable air to them. You're able to sell them, swap games with friends and digital software tries to null all that away.
I think physical software will live for awhile, as not everyone has an internet connection. Speaking of an internet connection: If all games are downloaded from the internet, with loads of communities intertwined, it could cause a major beating for core games that are single player only.
Unless, proper sharing and new ideas are made to make the experience for solo games even better.