I prefer having a physical game collection, but with the way physical games are handled now, with more than half the game needing to be downloaded to the console to cut costs or because they didn't finish the game before release, it doesn't solve the preservation or ownership problems anymore.
That's where piracy comes in, even if it does tend to have negative effects on smaller devs. So long as there is no server or internet connection required to play, piracy will rain supreme in preservation.
Ownership, on the other hand, is a lot trickier. I personally say just having, for PC games, the game download .exe (or equivalent file) is enough to be considered owning it, but that doesn't mean much.
The way I see it, piracy is fine, but only once the format is dead. I recently hacked both my 3DS and Vita to access the whole libraries since those formats are dead with ones digital store switched off and the other half dead and barely functioning.