Like almost any video game statistic, the percentage of digital vs. physical isn't very meaningful without knowing how it's calculated. The figure from the OP most likely takes into account mobile games, as well as in-game purchases, which makes it almost irrelevant in the realm of traditional console games. Actual console game sales are still mostly physical. http://www.eurogamer.net/articles/2017-05-10-ea-reckons-40-percent-of-console-game-sales-will-be-downloads-by-the-end-of-2017
Unrealistic quality and price expectations of the consumers, free full playthroughs on YouTube and Twitch, stagnant market size - I think those are the biggest issues single-player devs are facing right now.
Oh, and by the way, Steam also takes a 30% cut from your sales. It doesn't take physical releases to end up with a tiny profit margin.