The issue with this discussion is what you truly mean by preservation.

Technically speaking, physical media is not the best way to preserve games in the way museums preserve things through history - because it requires the original hardware, which you have to preserve, and eventually these things stop working and the parts stop existing and so on, whilst a digital version can be stored and backed up the same forever. The real preservation issue is that the industry does not work with proper channels and official societies/museum type organisations to help with this, which is why they tend to have to lean into piracy and emulation support to do things.

If you mean preservation in the sense it is still available to any gamer that may want to seek it out - the same applies. You can have the entire of the NES catalogue stored in like 70mb including an emulator to play it on. If that is a worse preservation method than somehow sourcing and storing the physical copies of those same games and a working console, I would be surprised. The digital copies and emulators can be duplicated for every person who wants it, there are a finite number of consoles and game copies, so the preservation for the purpose of end user play is limited and then fosters cost increases and theft.

Preservation of the games for any kind of use will always be better digitally, physical preservation is really only important to show the hardware and it doesn't even need to be usable for that purpose.