Discs can rot, but I would still take a large blu-ray collection over a large MKV collection stored digitally. The odds that your entire blu-ray collection will all rot are much lower than a catastrophic data loss.

And most people are not good enough sysadmins to keep a collection of digital files from being lost over decades. And even more so when the digital files are pirated, which makes them more or less fungible, they can be redownloaded so investing in backups is not a priority.