Hang on to your discs
Hey, readers.
Last week’s newsletter was quite a glum one, and I’m sorry to say that the top stories for this week aren’t any better. I briefly mentioned in last week’s intro that PlayStation made plans to phase out physical game releases, and we’ll get deeper into that below. But it had me reflect on my physical game collection, and I look at it with far more significance and affection.
While I don’t foresee platform holders such as Steam, PlayStation, or Xbox rescinding access to most of the digital games I paid for any time soon, the fact that they technically can is alarming. Just being able to access all my games—even if I don’t plan on touching them in the near future—is super important. At the very least, they look great on a shelf.
Let’s dive into the nightmare that is the gaming industry.
This issue will fill you in on:
PlayStation to ditch discs starting in 2028
Image source: PlayStation website
The industry shifts toward an all-digital future
Sony will not produce or sell discs for any new PlayStation games releasing on or after January 2028. In a PlayStation Blog post, Sony cited “consumer preferences” that trend toward digital games and away from physical releases. The announcement was shockingly short for what was a monumental change for the company, and the video game industry as a whole.
Reportedly, Sony told publishers that they can still place orders for discs after January 2028, but only for games that release before that cutoff date. It’s said that Sony’s biggest production plant for PlayStation discs is already transitioning to manufacturing other products, indicating that this shift has been in the works for some time.
Unsurprisingly, consumer reaction to this news has been largely negative. A “Don’t Kill the Disc” petition has amassed over 170,000 signatures, and pretty much every social media post from Sony—even ones about the completely unrelated upcoming Spider-Man movie—has attracted angry replies about PlayStation’s decision.
Game companies like Iam8bit and Limited Run Games, renowned for physical limited edition releases, expressed disappointment as well, though the Video Game History Foundation stated that it was already preparing for this inevitability, saying that “the vast majority of video games produced over the last two decades were not made for dedicated home video game consoles, let alone pressed to physical media.” It’s said that about 80% of game sales for PlayStation in the latest fiscal year have been digital.
Are Xbox and Nintendo going all-digital as well?
While plans for Xbox’s next console, codenamed Project Helix, remain under wraps, speculation and reporting point toward Xbox also abandoning physical formats. A report from Windows Central suggests that Helix will drop the disc drive from the console entirely. Reports also indicate that Microsoft is looking into a disc-to-digital feature, which would theoretically make the bitter pill easier to swallow.
Even amidst the possibility of an all-digital future for Xbox, the brand is still promoting its upcoming Halo: Campaign Evolved remake (which is also set for a PS5 release) as having a physical disc edition. (I’m sure that social media post will age gracefully.)
Meanwhile, fans seem convinced that Nintendo will keep on with physical releases, and Nintendo’s controversial Game-Key Cards, which are physical cartridges that don’t contain the game itself (and instead have a key to download the game from the internet), have gone through an unexpected positive reevaluation. Unlike with purely digital games and codes, you can resell or lend Game-Key Cards.
It’s also worth mentioning that analyst and industry advisor Mat Piscatella believes that Nintendo will stay on its own track and likely won’t change its plans solely based on what PlayStation and Xbox are doing. In other words, Nintendo will keep Nintendo-ing.
What’s the best way to actually “own” your games?
While there are clear conveniences of buying digital games, such as being able to open any games you have installed without changing out discs, you ultimately just have a digital license to play that game rather than truly owning it outright.
For the most part, physical games have the game on the disc or game card itself—though you will see cases where discs might only have part of the game, and the rest of it is downloaded through the internet. And either way, modern PlayStation and Xbox consoles require you to install the entirety of the game onto your console memory, so that disc mostly serves as a key for you to access your game.
Still, it’s great to be able to resell physical games or lend them to your friends. There’s still a large secondary aftermarket for games, whether it’s from GameStop’s selection of used games or the countless local and online retailers out there.
On the digital end of things, storefront GOG reminded people in the wake of the PlayStation news that many of the games it sells are free of digital rights management, meaning that you download its digital games detached from any other ecosystem or online account and you can do with them as you wish.
Xbox is laying off 3,200 workers and divesting from five studios
An image from State of Decay 3. Image source: Xbox Wire
“Our business today is not healthy”
We’ve known for weeks that several studios owned by Microsoft were in precarious positions, and we now have a better picture of what Xbox’s organizational structure will look like going forward. To start with the worst news, Xbox is planning to lay off 3,200 people over the next year, with 1,600 of those cuts already taking place at the time of Xbox CEO Asha Sharma’s announcement.
Xbox is also parting ways with five of its studios. Double Fine Productions (Brutal Legend, Psychonauts) and Compulsion Games (We Happy Few, South of Midnight) are going fully independent, and the plan is for both studios to retain their properties and catalog. Meanwhile, Ninja Theory (Hellblade) and Undead Labs (State of Decay) “entered terms to join new ownership” under undisclosed buyers—their respective upcoming titles of Senua and State of Decay 3 are still in the works. Finally, Arkane (Dishonored, Deathloop) wasn’t able to begin talks on its future until this announcement due to French labor laws, but those discussions are now in the works. (Though the status of its Marvel’s Blade game is unclear.)
Additionally, former Minecraft franchise head Helen Chiang is now Xbox’s chief operating officer. In a bit of reorganization, Mojang Studios, the company responsible for Minecraft, will no longer report to Xbox Game Studios and its acting head, Matt Booty—instead, the company reports directly to Sharma. Similarly, King, the mobile game company behind Candy Crush, is being moved from Activision Blizzard and also now reports to Sharma. Minecraft and Candy Crush, as you might expect, are heavy-hitters for Microsoft in terms of active player counts.
On a wider scale, Microsoft eliminated a little over 2% of its entire workforce—that’s around 4,800 people. Those laid off from the Xbox division make up about 20% of the division, and they include members of the accessibility team, about a quarter of The Outer Worlds developer Obsidian, half of The Elder Scrolls Online team, and more than 90 people from Doom makers Id Software. And remember that this is only half of the planned layoffs at Xbox.
What was going wrong with Xbox?
On the surface level, it appears that Xbox’s multi-billion-dollar gambits on the Netflix-like Game Pass subscription service and its acquisitions of numerous studios and two big publishers (Bethesda/ZeniMax and Activision Blizzard King) haven’t paid off. Sharma’s message also partially lays the blame at the feet of Xbox’s multiplatform strategy.
In Sharma’s own words, Xbox is “operating at margins that are 3-10x lower than comparable platform and publishing businesses,” and all of its bets “did not grow at the pace [Xbox] expected.” In other words, Xbox’s attempts at growth and expansion caused the business to be unsustainable, and these layoffs (and all of the other Xbox layoffs that have happened in the past few years) are the human cost of those bets.
Subscription numbers for Game Pass reportedly fell by 4 million subscribers since 2024, with the current number being around 30 million subscribers. It’s said that Xbox had projected that 77 million would be subscribed to Game Pass this year, but the reality isn’t even close.
In her memo, Sharma also blames an overly complex management structure (claiming that “work passes through as many as 14 layers of management”) and fragmentation within its operations, hence the reason for appointing a new COO.
What’s next for Xbox?
It looks like that Xbox will focus largely on the bigger franchises, namely Halo, Gears of War, and Forza. Bethesda and ZeniMax will shift their focus to Fallout and The Elder Scrolls, along with Doom, Wolfenstein, and Quake. I wouldn’t be surprised if you saw fewer games like the acclaimed but niche Keeper or the award-winning South of Midnight. You can also expect more Xbox-exclusive games, with Gears of War: E-Day and Clockwork Revolution being the first titles in this initiative.
One odd point that Sharma included in her memo was a desire for Xbox to be “one of the few companies that entertains more than a billion people each day.” It’s unclear what exactly that means or how she hopes to accomplish that.
Replay: What else happened?
An image from Rhythm Heaven Groove. Image source: Nintendo Press Center
Other news hits
Regulation from the EU is resulting in Nintendo being required to make Switch 2 consoles and controllers with replaceable batteries, but it doesn’t seem like the original Switch will receive the same treatment. As a result, Nintendo of Europe will stop selling the Switch starting in 2027, though sales will continue in the rest of the world.
A leak from a strange source—specifically, a listing from the Brazilian Ministry of Justice and Public Security—indicates that Nintendo is making a game apparently titled “Metroid Ravenous,” which fans speculate is a follow-up to Metroid Dread. Is a new Metroid a matter of public security in Brazil??
Christopher Nolan’s The Odyssey has an official tie-in game in Roblox, which Homer himself could never have predicted.
Accusations have come out from the union of Rockstar Games employees, alleging that the Grand Theft Auto studio has failed to address pay inequity while facilitating development crunch and “weaponizing” bonus payments against employees.
After the otome game (in layman’s terms, a dating game about hot guys) Love and Deepspace announced and subsequently removed a love interest character—a werewolf named Valko—a noticeably large group of fans at Anime Expo paid tribute and created a real-life shrine to the character, demanding his release. You’d think that an actual person had died.
Big new game releases include…
Nintendo’s cute and quirky rhythm game series is back with Rhythm Heaven Groove (Switch). Play around 80 singleplayer and 30 multiplayer minigames where you have to complete normally mundane or silly tasks based on the beat of the music. Critical reception has been largely positive, and there’s a free demo on the Switch eShop if you want to see if its brand of whimsy is for you.
In what seems like the worst timing ever, the Doom: The Dark Ages — Revelations (PC, PlayStation 5, Xbox Series X/S) DLC came out just as it was reported that what appears to be half of Doom developer Id Software was cut as part of Xbox’s mass layoffs. It might be hard to rip and tear as the Doom Guy with that in mind.
Addendum to “Fill Me In On Minecraft’s status while Xbox is on fire”
A couple of issues ago, I addressed a question from dear reader René: “With the cacophony of stuff happening at XBOX, have you heard anything about what could potentially happen with Minecraft?”
While there isn’t much to add, the news coming from Xbox this week confirms that Microsoft considers Minecraft to be a crown jewel. And as mentioned earlier in the issue, Mojang Studios now reports directly to Xbox CEO Asha Sharma, implying that she wants to have a closer eye on the Minecraft franchise.
Stephen Totilo’s Game File newsletter has some additional insight on this reorganization, saying that Sharma believes Minecraft to be “massively underinvested,” especially compared to Roblox. Totilo also says that Minecraft was “funding much of the rest of the Xbox gaming team.” In short, you could say that Minecraft was footing the bill for other Xbox projects while still operating independently, and Xbox wants to put more money into Minecraft itself
A report from Jez Corden of Windows Central adds that Sharma is exploring “direct integrations between Xbox and Minecraft,” though what that might entail is unknown. Corden speculates that Microsoft could add some exclusive content to Minecraft’s Xbox console versions and leverage the game somehow to sell its next console, but such moves theoretically wouldn’t degrade the Minecraft experience on other platforms.
What all of this will result in, good or bad for the series, is really your guess.
That’s all for this week, assuming nothing else catches on fire as I write this.
Keep cool,
Chris Compendio
