Key cards are the solution and grifters just ruining all the physical
I'm not gonna defend Sony, but Blu-ray disks are obsolete with their 33MB/s; for straight gaming, 90MB/s of SW1 NAND isn't enough, and it has random access. But even for just installing the game, in the USA internet speed is around 39 MB/s (310 Mbps), and it's going to become better; personally, in the non-US, I have 55 MB/s. BD still has a 128GB max capacity, and those are more costly, and contrary to Nintendo, it won't save space on the device; it's just an inefficient way of transferring game data. The real benefits were the ability to share, sell, etc. your copy of the game and the real solution to that were key CDs.
Nintendo didn't invent key cards; downloadable games from physical media were before them and were actually becoming more widespread. Nintendo had the decency to have a talk about that with consumers and to label such media so consumers would know if it contains game files or if they should be downloaded.
But grifters started grifting with "it's the worst from both worlds" bs giving Nintendo a great backlash. What should Sony do, seeing that? BDs just don't work for the biggest games on the console; grifters and, seemingly, people are strongly against key-CDs and smaller games, which fit fine in cheap BDs mostly bought digitally. If grifters are unable to take any compromises, eventually they will have nothing and probably should be happy with that.
Again, I'm not going to defend Sony; fuck them. They and Xbox decided to go digital only from the PS5 without disk drive times, but game key cards were the last nail in the coffin of physical on Sony's platform.
Nintendo still going strong with physical cartridges, which currently are superior media with faster random access speed that actually saves space on the device itself, but they're damn expensive; it's a basic CS memory speed/price pyramid. I don't know which compromise is better, the physical one, which is going to be $10 more expensive (I believe it's actually more with distribution costs), or GKC (for some games we don't even have a choice due to capacity limit), but without that we are gonna lose physical on Nintendo's platform too.
From Nintendo, I'm waiting for better utilization of SW1 cards on Switch 2 with free patches. Somehow only Nintendo as a publisher is doing that; I believe it's not that intuitive for other publishers.