They've been saying that for at least three years now.
They've been reducing the footprint and phasing out in-store inventory for years (many Best Buys have a single 'new releases' kiosk and not much more than half an aisle for catalog titles).
But Best Buy has basically confirmed the report by providing a comment:
[10/13/23 Update: Variety and Media Play News have now confirmed my reporting that Best Buy is phasing out physical media in the new year, following the 2023 holiday shopping season. The company will apparently still continue to sell videogames. A Best Buy spokesperson provided this statement to Variety: “To state the obvious, the way we watch movies and TV shows is much different today than it was decades ago. Making this change gives us more space and opportunity to bring customers new and innovative tech for them to explore, discover and enjoy.” So... there you have it. Longtime readers of The Digital Bits can rest assured of two things: First, no this does not spell the end of physical media. And second, I’ll have a great deal more to say on this topic here at The Bits on Monday and all next week. See you back here then.]
Looks like after the holiday season they'll liquidate what's left (online and in store) and re-map inventory to those already limited spaces and get out of the physical movie business entirely.
That's a big domino toward many movies never making it to physical media. Personally won't miss it, haven't bought a physical movie since The Martian and it got watched twice. Our Blu-rays and DVDs have been in a box since we moved 7 years ago and will probably get donated at some point. By comparison we have hundreds of pieces of content (TV and Movies) on Prime that we've purchased and thanks to Movies Anywhere can view on a number of other services as well.
I get the appeal and the lament, for sure.