Businesses don't work for principles. They work by servicing a demand for profit.
If Best Buy loses money by selling physical media because people will only buy them on clearance (or not at all) then of course they're gonna stop selling them.
Then the media companies aren't going to manufacture them because no stores want to buy them to sell and the logistics of it no longer make it worth it.
All of this being tied to that buying physical media also is no longer seen as worth it for most people.
So yeah things aren't looking great and I can't really blame anyone specifically. The signs have all been there for a while. It sucks but if consumers aren't buying them what are they supposed to do? If anything they did it to themselves by making streaming services a much better deal.
A good chunk of the problem is that " Gen Z" rarely has houses or even there own apartments to themselves, pepole are getting to poor to have the room to own much and its causing many things to collapse.