Modus, like Coop has said, it's an ownership thing. When you have the physical CD (cartridge, floppy disc, memory stick, whatever) you OWN that software outright and can install it on your PC, your new PC, your new new new PC how many times you want, whenever, forever. Unless you break it physically it'll never degrade or stop working. Streaming a game, heck, even Steam, what happens when that company goes out of business in 2030 and you're left wanting to play all your old games? You'll need authentication from a service that no longer exists; or after reformating your vintage 2010 PC you'll have no way of redownloading.
Personally, I don't think this mentality will ever change because we, as a society, are inherently materialistic. Portal 2 for example; it probably would have been cheaper to play it in an arcade (if it had a cabinet), it's not very long at all, but most would turn their noses up at that idea and pay possibly $20 extra to own the software, even if they never replay it.
Take music for example; yes, buying through iTunes is popular, but how many people do you know that have loved a band/song so much they've gone out to buy the CD just so they can own a physical copy?
Unless they can find a way of making the materialists happy, I think physical copies of games will always exist (through our lifetimes anyway), even if they become simply 'collector's editions'. If I am wrong and everything goes virtual, as long as that mentality exists, there will always be piracy, not simply to get out of paying for the stuff, but so you can OWN that software outright.