I hypothesize that the kind of reader who wants a physical copy of a book is much happier to get a hardcover. I know I’ve personally lever liked the cheap flimsiness of mass market paperbacks and I don’t read frequently enough for the higher price of a hardcover to matter.
The kind of person who wants the cheapest possible book moved from mass market paperbacks to e-readers.
There was a recent article probably posted here about how UHD 4K Blu-ray sales are increasing over time, somewhat counter to what the average person might assume. I think this analogy works reasonably well. The 4K UHD buyer fits a niche of someone who isn’t satisfied by streaming. They want a keepsake physical piece of media with beautiful box art and the highest quality picture and sound available.
In contrast, the kind of person who would have bought DVDs from the Walmart bin has almost certainly moved to digital. They never cared about the quality of the media, they just wanted a low price with a lot of convenience.