Microsoft clarifies how external hard drives will work on its next-gen Xbox Series X and Series S consoles.

The next-gen Xbox duo will support existing USB 3.1 external hard drives, but there's some caveats. Today Microsoft confirmed a bunch of new details on what to expect from cross-gen storage and next-gen performance, and how the new $219 expandable SSD memory card fits into the mix:
- External SSD is $219.99, acts just like built-in SSD, can be used to store non-optimized games
- Next-gen Xbox Series X/S games can't launch from external HDDs but they can be stored there
- Next-gen games stored on HDDs can be transferred over to SSD
- Xbox Series X/S optimized games can only be played from an SSD
- Cross-gen games automatically upgrade to optimized versions via Smart Delivery
- Once a game is upgraded, it becomes optimized and can only be launched/played via SSD
- Next-gen performance like native 4K 60FPS, 120FPS, ray tracing, and ultra-fast load times are exclusive to games on the SSD or SSD memory card
- Next-gen exclusive games (games like Scorn that are only available on Xbox Series X/S) can't be played on an HDD and must be launched from an SSD
- Any un-optimized original Xbox, Xbox 360, or Xbox One backward compatible games will get native boosts like faster loading times when launched from SSD, but not from HDD
- Microsoft implies Xbox Series X games with 4K textures will be larger in file size

Read Also: Xbox Series X SSD is revolutionary, changes Xbox gaming forever
Considering how big games are now, we'll see a conjunction of HDDs used with SSD tech. Remember that space is limited on both consoles and games are going to get bigger now that they support native 4K resolution.
The Series X features a built-in 1TB PCIe 4.0 NVMe M.2 SSD (roughly 931GB formatted, less with OS). The Series S has just a 512GB SSD (just 476GB formatted, even less with OS). These drives are going to fill up fast especially with Game Pass downloads.
Microsoft's solution is to sell a 1TB expandable SSD memory card for $219, which is roughly 73% of the Series S' MSRP (and almost half of the X's). Even still this won't b enough and this limited storage space encourages constant rotation of games--which is the opposite of what publishers want.
In the end, storage limitations will always be a problem for console gaming. Microsoft can solve this by adding cloud-to-console game streaming on Project xCloud, but that's a story for another day.
The Xbox Series X and Series S consoles release November 10, 2020 for $499 and $399 respectively. Check below for a side-by-side comparison of the entire 9th generation of consoles:
