So far, the backlash has been immense and Sony has even avoided social media for several days following this announcement. They are likely walking this back now.

Still, as you said, it is inevitable.

There is a middle ground though and few are talking about it, though more are picking up on it.

The license. Digital Rights Management (DRM). Do like GoG does. Let fans burn the files to a disk, copy to a memory card, whatever they want to have for "physical" but we all know that is too much control in the players hands for most companies.

They can keep their DRM or whatever locking the install to that console, though I dislike this myself as it is still reliant on servers and such to check those licenses and companies can change licenses via "software updates" for the console as well. Still, it is better than simply telling fans to kiss off if they prefer physical - this way, those that want it assume the costs in making it happen.

No tons of copies of a game sitting in the clearance bin or wasted plastic and money making physical copies that simply did not sell.

It is not likely to happen as that still gives the players too much control over those games and companies don't want to give away any amount of control they don't have to.