I mean... Sales of pretty much everything not essential to continued life are dropping across the board, so this isn't exactly surprising.
I haven't bought a physical game in quite a few years, but up until this past year or so it was primarily because most pc games are fully digital. I do like the convenience of being able to quickly download something anywhere I have wifi, I must admit I like having the ability to install a working version of a game without internet. (where possible I burn optical discs with offline installers but that's mostly for nostalgia, I don't think I'll ever NEED them, and it's also not practical for large games)
When I used an Xbox, I preferred physical media over digital purchases 100% though. I never had an account lose access to a game but I figured if I ever did I still had the discs and could play on another account or offline Xbox. Of course, that last part began to become less viable with so many games being shipped unfinished, and needing an "update" the second you put the disc in...