I do personally see digital games eventually surmounting physical releases as the primary method of distribution, due mostly to its sheer convenience (for both the developers and end players). Your backup point is practically moot, given the prevalence of cloud storage that most gaming services provide these days and more a cause of Nintendo not "getting with the times", so to speak.
That being said, as a retro gaming enthusiast, I will always find something endearing about taking a disc or piece of plastic and stuffing it into a game console. It's immensely more satisfying than selecting a game from a menu, as irrational as that sounds. You also have ways of displaying your physical releases (something that I'm sure, with time, digital releases can catch up to, but haven't, as of yet).
While I do use digital downloads for services like Steam (it's hard not to when they're practically giving away games for free), I just find something irrationally satisfying about physical releases, especially considering the fact that you have to get out and buy them, making them an excuse to go outside once and a while.