It's happening faster than I would have thought, but there's a ton of good reasons:
1) PSN has sales basically every other week, and there are no physical game shops around here anymore (even if I wasn't restricted from going to them because of Covid), and online shops rarely have sales for anything except old games, which are also quite likely to be on PSN sales.
2) Basically instant delivery, while physical needs to be shipped, which tends to be annoying when games release on a Wednesday or Thursday but don't get to me before the weekend, which can be really annoying when I've decided to buy something on release rather than wait and get it cheaper.
3) CE versions kept me buying physical for a while, but I've realized that most CE versions are overpriced crap anyway.
4) I don't really sell games while they are worth anything, and it's a hassle to arrange sales and ship stuff off (especially now). I've basically never plowed through a game and then resold it. In the rare cases that I do plow through a game, like Sakura Wars, it's because I like it and want to keep it.
5) Even selling stuff later down the line... most of them will be pretty much worthless because if a game is good it will get reissued/remade, and if a game is bad noone wants it. And even if a game becomes expensive, like, say Suikoden II. Twenty years later you can probably expect to sell it easily for 3X the original price. Is that worth the hassle of hanging on to it for twenty years? I'm making a little money now, when I have a decent paying job anyway, from selling games that I bought when I didn't have much money. If I could have bought those games cheaper digitally and, like, invested in buying an apartment back then, I would have been much better off.