Why are fewer and fewer Xbox games releasing with physical discs? "We wouldn't be able to make our investment back."

While there aren't really any hard official figures, it's no secret that Xbox has become a broadly digital platform.

In decades past, we loaded up video games on cassettes, cartridges, CDs, and eventually Blu-Ray discs. Around the advent of Blu-Ray, though, something changed.

Cloud storage and digital delivery became a lot faster and a lot cheaper. As such, platforms like Steam very rapidly devoured the market for physical PC discs. Coupled with digital rights management (DRM), the very idea of a "physical" PC game seems almost like an alien concept, outside of a few occasional limited releases.

Today's PCs and laptops rarely even ship with a disc drive at all, and the same is about to happen to the traditional consoles, too, most likely.

A variety of factors are putting an end to the very concept of disc-based games. More and more games ship digitally only, particularly in the PC / Steam era, and more and more consoles are shipping without disc drives. Both PlayStation and Microsoft have discless digital versions of their console range, with PlayStation's financials pointing to a trend away from physical copies at an increasing pace.

This trend has been more rapid for Xbox.

The death of the physical Xbox game

Microsoft was the first of the big console platform holders to offer direct digital downloads for games, and the first to launch a discless console. Microsoft also incentivizes users switching to digital with its push towards device-agnostic play, which depends on the licenses being digital. Xbox Game Pass is also at the forefront of the Microsoft gaming ecosystem, and naturally, it's all based on digital DRM. And, you can't play your physical discs in the cloud, via Xbox Play Anywhere, or on an Xbox Series S. Most of the paths into the Xbox ecosystem these days are simply digital-first.

On Amazon Store listings for games, the firm often offers both an Xbox Series X|S digital key, alongside the Xbox Series X disc-based version. To complicate matters, there's also now a discless Xbox Series X as well. For massive online retailers like Amazon, none of this has presented much of an issue. But the market of addressable users wanting Xbox discs has shrunk to such a degree that many traditional retailers have stopped stocking Xbox discs altogether.

Microsoft has yet to offer a USB-based disc drive attachment for any of its consoles, and there's honestly no reason to think it will. The upcoming Xbox Ally handheld will naturally be digital-first, although, as a Windows PC, you could plug a disc drive in via its USB ports. But at least for gaming, there's almost no reason to do so. When was the last time you purchased a physical PC game? I can't even remember; it has been literal decades. But not everyone is happy with it.

Companies like Limited Run Games have been absolutely fantastic at providing physical versions of various games, with an emphasis on console games. LRG is by far and away the frontrunner here, but despite its fame, even it has struggled to find a real return on investment for creating Xbox versions of some titles.

Speaking to a user on X, Josh Fairhurst described why it has not created Xbox versions for some upcoming Konami Limited Run Games. "[Our] physical releases on Xbox — even of major, substantial games — rarely top 2,000 copies sold," Fairhurst said frankly. "We wouldn't be able to make our investment back. Unfortunately, Xbox is a very digital heavy platform." Fairhurst explained that when they've entered into deals purely for physical royalties, the Xbox volume simply isn't there to justify the stock allocation, essentially.

"Yes, a port [to Xbox] will cost us about $50K on average, and physical releases on Xbox generally only make us about $30K after costs and partner royalties. We count on digital to make up the slack, but on some projects we have no share or only a tiny share in the digital earnings."

Limited Run Games typically deals with indie titles and games that have a smaller footprint, but even bigger companies like Square Enix, of Final Fantasy fame, have given up on launching physical games on Xbox. Final Fantasy 16, 7 Remake, and Final Fantasy Tactics — all direct-to-digital on Xbox.

Microsoft's reputation as a game preserver has been questioned

I haven't purchased a physical Xbox game since the Xbox 360 era, so I'm very much part of the trend that has created this situation. However, I do have fond memories of collecting games as a kid, back when I was less storage-conscious. For those with the space and time, it's a great hobby, and one I wouldn't like to see disappear.

Microsoft has positioned itself as pro-game preservation — but digitally so. Thanks to Xbox's very excellent backwards compatibility program, Xbox is ironically the only place where you can play every single mainline Final Fantasy game on a single device, given that some never launched on modern PlayStation or PC platforms. The downside is that, of course, it depends on Microsoft's continuing support for the Xbox platform ecosystem.

Disc-based games that fully support offline play are the only real guarantor of preservation further into the long term. Microsoft has shown itself to be a non-committal company, changing its priorities on a dime to chase shareholder bucks. For many, that lack of confidence in Microsoft's priorities creates a great deal of anxiety over its commitment to gaming — which would naturally lead to a preference for discs, or perhaps leaving the platform entirely.

Surely there's more Microsoft could do here to create a win-win situation for all gamers in its ecosystem, and not just the ones who have gone fully digital.

It would be awesome if Microsoft could partner more closely with Limited Run Games to help subsidize or offset some of the costs. There's no real reason I can see why Microsoft couldn't also create a cheap external USB disc drive for its Xbox Series S or X digital consoles, even if all it was for in the short term was license validation. USB read/write speeds may preclude modern games from running fully from the disc, but perhaps the next-gen Xbox consoles will have more modern ports. Microsoft could keep stocks low and build carefully based on demand, at least to help users who have amassed large libraries of physical games.

Indeed, the next Xbox is widely expected to be more PC-like than ever, running full Windows 11 (or maybe Windows 12?). This would potentially make it the most compatible console in history, if indeed it has the full range of legacy APIs that Windows proper has. In partnership with AMD, Xbox is building chips that support both PC games and traditional Xbox console games, and Microsoft President Sarah Bond oversees an internal game compatibility task force dedicated to this effort.

Perhaps in that universe, just any standard USB Blu-Ray disc drive would be able to carry your disc-based Xbox library forward, but that might be wishful thinking.

Microsoft is typically a company that identifies trends and leans into them — and is rarely one willing to fight against them. Microsoft sees digital delivery as the ultimate form of preservation and compatibility, which naturally benefits it, since you'd need to be in its ecosystem and cloud to access it.

For those who simply enjoy collecting physical games as part of the "fun" of the hobby, Microsoft's utilitarian attitude towards gaming will perhaps run in opposition. But, even Nintendo and its partners have been criticized for releasing Switch games that don't actually contain a cartridge.

Perhaps the "convenience" current is just too strong to swim against here. What do you think?

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