Dang it's actually kinda amusing how you kept going back to the PS2 as evidence, as if a console that launched almost 25 years ago has anything at all to do with media consumption today. You're referencing a time when Blockbuster Video was still going strong, when people had 100 disc CD changers, when you had to shell out extra to buy a separate accessory to connect your console to the internet, none of that is relevant now. It wasn't even relevant 10 years ago. It wasn't even relevant 18 years ago when the PS3 launched. The Blu-ray capabilities of the PS3 were nowhere near the selling point of the PS3 that DVD was for the PS2. Your claim that "every console in someone's house is a physical media player" isn't even true any more! You've been able to buy xboxes and playstations without a disc drive for almost 5 years!That's an overly specific thing to focus on. Dedicated players have always taken a backseat to game consoles. It was actually a big killer app for the PS2 back in the day.
Physical media isn't "losing" the fight, it lost a long time ago.