Large game collections are of much more value than a console, and consoles are more complex and have a much higher failure rate. Particularly if it is a console vs a simple media like a Wii game optical disc that is well taken care of.

Maybe I had 100 $40 games on my $100 console. Console breaks, I lose all games.

With physical media: One game breaks, I lose one game. One console breaks, I lose one console. Way less risk.

Also I can't sell or transfer the digital copies to friends or family.

Lock-in digitals are not at all equivalent rights of physical copies.

For cartridge roms and pressed CDs the failure rate is much, much lower than the console and the expected life span much longer. Not to mention it's often possible to back those mediums up and play the backups or original media on another console.

For carts this is (mostly[1]) true but honestly I'd be pretty surprised if the average CD outlasts a console that used mostly flash to store the games on. Sure if the flash has had consistent write cycles for years it might fail eventually but probably people will be finding games intact on wiis for a long time yet.

A lot of video game CDs barely lasted the life of their console without becoming basically useless.

[1] There are mask roms that are prone to failure, and some NES for eg. games are vulnerable to progressive failure of their battery backed RAM chips, which were not just for save backup but were also often used as extra RAM with a lot of write cycles (and to be clear, I don't mean the battery dying - I mean stuck or flipped bits on the ram itself).