Xbox's Phil Spencer: 'Getting rid of physical is not our strategy'

Microsoft has no plans to force an all-digital gaming future by getting rid of physical game discs.

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Digital has been on the rise since the Gen8 era, and now digital access and delivery makes up the lion's share of annual video game revenues (Nintendo, on the other hand, is an anomaly that makes more from physical game sales than it does from digital...but not by much).

To further this market along, both Sony and Microsoft have made blatant attempts to shift consumer behavior towards digital by releasing lower-cost consoles without disc drives. The maneuver seems to have paid off, and now all current PlayStation 5 consoles are digital by default. Microsoft is also believed to release a digital-only Xbox Series X this fall.

Following reports of Starfield being removed from Walmart store shelves, gamers were worried that Microsoft could simply stop releasing physical discs in stores. This would reduce costs and potentially improve the margins of the games business, and a lot of retail stores are just selling game cards without very many games on display. How soon until games just disappear entirely?

According to Xbox gaming CEO Phil Spencer, removing disc-based games from store shelves isn't part of the plan.

"...I will say our strategy does not hinge on people moving all-digital. And getting rid of physical, that's not a strategic thing for us," Phil Spencer told Game File's Stephen Totilo (subscribe here).

"We are supportive of physical media, but we don't have a need to drive that disproportionate to customer demand,

"We ship games physically and digitally, and we're really just following what the customers are doing. And I think our job in running Xbox is to deliver on the things that a majority of the customers want. And right now, a majority of our customers are buying games digitally."

Out of all of the big 3, an all-digital future may benefit Microsoft the most. The company has put significant emphasis in its digital service, to the point where Xbox Game Pass is now the core basis of its online-driven subscription service infrastructure.