The ultimate problem with anything downloaded is that it can be deleted.

If there is a physical defect in the property you are purchasing, you can get a replacement or refund. You can possibly get a re-download if your first one is corrupted or deleted, but how can you prove it? What if it is an issue with a media player that just won't play the download? In the case of the physical media, you can return the defective item, thus giving proof of the need of a replacement. Digital downloading will fail when it comes to customer service and replacements, as it will be harder to prove a download was unsuccessful or faulty (as companies would be wary of someone wanting to try to get a movie 2 or 3 times for one price).

Also keep in mind that people still love physical objects, if for no other reason that you can hold it in your hand. Physical media is going to remain the same way cash will remain: people are always going to want something permanent that they can physically call their own.