Yes, this coming gen will start with 1440p games until 4K games become standard later in the gen. Then 8K comes. Not to mention technologies that are programmed into a game as hardware specs improve. Soon we'll have games with more than 100GB.
And don't forget that people are cheap! Physical games will always be cheaper, and not everyone will want to pay for faster internet. Yes internet access will improve, but current internet will become cheaper. The average console gamer isn't a single adult techie with loads of disposable income (which is why comparisons to PC gamers are bad). You kind of downplayed this before, but alot of people don't have PSN/XBL/NSO simply because they don't want to pay for it.
Digital downloads are growing fast but playing physical media is one of the services that is important for a console system. As in, if you don't have physical media, that is a missing feature that will cause your console to fail.
Physical media is, in itself, an important feature, and profitable for both the consumers and publishers. Streaming and downloading are additional services, not replacements. If you notice, it's really only indie games and smaller efforts that go straight to digital.
