I prefer physical. I wholly understand the impracticality of having too much stuff taking up space, and I am pretty frugally-minded. So I try to find a balance and only buy what I think is worth the money.
I don't buy as many DVDs/Blu-Rays anymore, although that's partly because they don't really sell them anymore in my country. I recently even downsized quite a bit on my anime & wrestling DVD collections. If anything, I've been collecting more VHS tapes I've found in thrift stores.
I mostly just focus on my physical collection of video games at this point. What gets me is how digital is way more expensive these days for new games than the physical option, provided they receive one.
I will buy digital if it's through GOG and for a good price. Otherwise, I don't see much point in paying more money for something I have less ownership over.
I also have a habit of buying cute plush toys & tea mugs