I use to be a big supporter of buying physical copies of things. The idea of paying for something that I could see and hold was important to me. In the last few years I've switched sides. Last month, I found that two things I had purchased were no longer usable. My copy of Zone of the Enders 2 for Playstation 2 had mysteriously developed cracks stemming from the center of the disc, and my copy of Neon Genesis Evangelion Platinum Edition Vol.1 almost looks like its been melted. This made me very said, both of these I had bought new and paid 50$ and 40$ respectively. It just went to solidify my stance that physical media for games is a bad.
The alternative is to acquire everything digitally, and I'm gonna stick to purely legal methods here. Digital distribution still has some issues in many cases but I think Steam provides the best example of how you should do it. After I buy something on Steam, I can download and play it on any computer that I am logged in on. Steam allows me to download things as many times as I want without limitations, and at speeds that cap out my home connection I might add. All the limitations imposed how you can access your content would not cause any issues with any legal use of the products you bought.
I think a horrible example of digital distribution would be iTunes who I've bought one thing from an will never ever buy from again until they change their policy. iTunes started out by selling everything with DRM which made it so any music or videos you bought could only be played in iTunes or Apple devices. To my knowledge all their music is now free of DRM and I would hope the videos are the same way. Ignoring the DRM though, iTunes only lets you download things you purchased once (or again after like a week of purchase). So this means that when my iPod died a while ago and I wanted to re-download a game I had previously purchased iTunes told me to go and re-buy it and that I should have backed it up. Its a fucking 10mb game sitting on your servers that would cost you next to nothing to transfer to me and they refused. There are some other good ways to get music as well such as Amazon which is DRM-free as well, though I'm not sure what their policy is about re-downloading things. As far as movies, I haven't gotten the impression that there's a good source to buy movies digitally and most places seem more focused on either renting to you or streaming.
So that's my argument for digital distribution, let me give some examples of why I think you shouldn't buy physical copies of things anymore. As previously mentioned, there's my issue of your media dying for whatever reason. I take good care of my stuff. My copy of ZoE2 being broken is probably one of my old roommates abusing it. My copy of Evangelion though is beyond my understanding and you'd really have to see it. I think the last time I watched it was a few years ago and it was in the 360 so I'm wondering if the inherent fact that the 360 is a fire hazard had something to do with the damage to the disc.
In the case of games, they usually come with a box and manual. Manuals in 2010 are pointless, in fact Ubisoft isn't even printing them anymore. I believe that any modern game that you need to read the manual to know how to play has failed in game design. Collector/Limited/Special Editions have just become a way for publishers to get people to spend more than 60$ on a game. Throwing in things like, soundtracks, postcards, or in-game items cost next to nothing for them to package in and allow them to bump up the price. Most of the other stuff that comes with special editions of games I usually end up just throwing in a box never to be seen again. Probably the only exception for me personally has been things that come with figures or models that are of decent quality.
If you're not buying a game because of all that other stuff then you're buying it for the game itself. Its a disc, physically identical to a million other disc you could walk down to Best Buy and pickup. The reason you're paying 60$ for it is for the content on that disc which you could get digitally online. Right now I think that if you're playing games on PC you're hopefully already getting all your games digitally whether it be from Steam or D2D or some other service. Hopefully in the next few years consoles will have a better model for digital distribution making that finally practical as well as the way that we get the rest of our media.