I feel like it's bad practice to terminate a digital library, rendering anything you previously bought, but may not have it downloaded due to storage constraints, lost. As long as the library is always available, that's great, I can back it. Something like the Wii Virtual Console is an example of the wrong way to do things, imo. As much flack as I imagine Sony is getting right now, PSN at least carries your digital library over to the next gen. So even if one day you can no longer play your digital games on PS3 or PS4, you'll still be able to on PS5 at least. With the Wii Virtual Console, it's just dead, no options, you are out of luck.
Switch online feels weird to me because it's like a pay to rent service, I wonder how much the cost of Switch online for a year versus the amount it would be to buy those games individually in a theoretical digital store setting would compare. I'd like to think long term it'd be more affordable to buy them once and own them.
Physical should not be phased out, but if it ever is companies need to put more care into longevity of digital putchases, especially with digital only consoles.