I don't think it means they'll go next gen digital only, if anything, this should be them choosing to go physical, because it'll give them a way to turn things around on Sony next time, much like Sony did to them back with the Xbox One reveal. The disc to digital option is definitely a nice option to have, a disc being both a physical release and digital key so if something happens to the disc, you are all good, or really, you can have a version to share with friends while you still keep a version of it, so that's a big bonus for multiplayer games in terms of sharing, or really one could then sell their game and still have a copy of it.
All digital was always going to happen, I know there is a lot of push back against Sony, and for good reason, but I think the way they went about it is what is causing so much friction, and it's built upon a lot of other issues going on lately with Sony. Physical does have its limitations, especially nowadays with how massive games can be, and really, a lot of physical games are basically digital as it is with Day 1 updates or the game just not all being on the disc, but companies have to show that they are willing to make things better for the transition. PC gaming went all digital, but you can buy games from numerous different platforms, and the one main platform, Steam, is one of the best around. Sony doesn't have that with PSN, and I don't think Microsoft is much better, but they have Game Pass, which gives people access to a lot of games for a decent price.