But this started with me saying that keeping physical media around is better for the here and now because the utopia of digital licenses you're proposong is not fully here yet and physical media is still one of if not the best way to still actually own something.

Yes I understand that there are some exceptions with some games being online only etc. but even the physical discs (or carts) that only hold a licence are still a valid form of ownership because the physical license that the physical format itself provides can be transferred to another party, like borrowing or gifting it to a friend, or selling it.

At the moment there is no standard for such transfers with digital content unless the files are fully DRM-free which sadly is still not the norm yet and still in a legal grey area if giving such files to another party. And the current situation we live in right now physical media IS the only way for such a thing to exist for consoles due to the walled garden nature of their digital storefronts.

I agree that just having the files to keep, unencrypted and without DRM, is the best solution for an end goal for consumers, along with hopefully other laws that protect and allow the owner to transfer ownership to another. But perfect is the enemy of good, and right now that future doesn't feel possible in the short term especially for consoles as they are currently. So it would be best for all if physical still stuck around until the future of digital that the consumer actually wants is a reality and is the industry standard and norm, whether by the corpos falling in line from consumer pressure or via regulation.