Blue-ray will die, of course, no doubt about it.
Digital distribution will make the retail games obsolet?
lol, wake up guys, why do you think is winter the best selling time for video games, music, DVDs etc. ? Yes, because you give them away as present. Now try this with a digital coupon or via via steam. Imagine just for a second the face of a 14 years old boy when he gets a 50 Dollar coupon. And now imagine that he is not your child and the face of his parents when you do this.
People love things that they can touch, smell or whatever. Don't underestimate this fact.
Of course, the digital way will get stronger, but it will never replace the "real" stuff.
Just look what a failure the PSPgo was.
End of story.