If you're worried about the value of your collection depreciating, I think the solution is to become a more critical consumer. Don't go out and buy every available CE because, newsflash, some of them will depreciate. The CEs that stand the test of time, at least in my limited experience, are for games with a cult following. Sometimes these games are naturally limited because they weren't popular or marketed well at retail, but because of the cult following the units become highly prized later on and their limited nature only contributes to their value.
It seems like everybody here is rather concerned about collecting for the sake of personal satisfaction, and so to them I would say set whatever goals you want to for your collection and enjoy! You know, like, don't go off the deep end and skip paying your bills or anything. But other than that have fun with it, because at that point it's not really about the money anymore.
With the games I collect I always try to get a mint sealed copy and a copy to play with. Some of the games I collect are pretty old, and let me tell you, when they come sealed they are not cheap. So this probably pokes a hole in your argument about games necessarily losing value over time. If you're smart about what you focus your collecting on, you can have a collection which easily at least maintains its value, and keeping it sealed is probably a requirement if this is what you're after.
I also seriously disagree with your friend on the digital distribution topic. I mean yeah he's right, games, music, movies, etc are all heading that direction. I'd much rather watch a movie on Netflix than go out and buy it if I know I'll probably never watch it more than a few times in my life. But this is exactly why physical copies can be so valuable, because if it's one of my favorite movies, I'd much rather feel like I own it, not like I can just watch it on Netflix whenever I want.
Do you think that when a format becomes unpopular it also loses value? Cassette tapes are probably a good example in most cases. On the other hand, I got a MOTHER 1 original soundtrack cassette tape on Yahoo Japan once that I could probably get at least a few hundred dollars for from a crazy EarthBound collector. Still works, too. And when I collect NES games I don't care that my NES has been broken for years. Since I'll keep them sealed anyway I don't even care if the games inside don't work. For me it's more about archiving a relic or something like that, I guess.
All material things decay over time. Your collection might last until you're old and gray, but how many of the games or their hardware will still work? If you're in it for the overall item, like the sealed copies I collect, that doesn't matter. But say I hand my collection down to my hypothetical kids someday. If they don't throw them out or ruin them or sell them off, maybe they'll pass them down to their kids. Several generations later, do you think the collection will still be intact? Or will it just be a pile of dust and bits of plastic and circuit boards? If it magically holds up over time, will anyone even care about it, will it be relevant to society in hundreds of years, let alone valuable?
When you think about things in the LONG term, it starts to make you wonder. The longest lasting and most valuable physical media is going to be the sealed and preserved stuff, but you'll never know when the games inside stop working. If you don't care about the value or longevity, buy any game you want and open it and play it and have fun with it like it was meant for, but hope that you don't find out later it would have been very valuable had you kept it sealed. If playing the game is ALL you care about, digital is the way to go, and it's really the only way to preserve something indefinitely. But you can't collect it
