Phil Spencer Says Xbox Is ‘Supportive’ of Physical Media Amid Rumors of Shift to Digital Business

Phil Spencer appears to be dispelling recent rumors that Xbox is fully ditching physical disc, while remaining clear-eyed about the increasing consumer demand for digital games.

In a recent interview with Game File, journalist Stephen Totilo asked Spencer about a slate of rumors last month that Xbox was shutting down its physical game production divisions, exacerbated by leaked court documents showing an enhanced, all-digital Xbox in the works. Though Spencer made a point to address a number of the recent Xbox rumors in a podcast and Xbox Wire post last week, he skipped over the physical games question until pressed on it in the Game File interview.

“Gaming consoles themselves have kind of become the last consumer electronic device that has a drive,” he said. “And this is a real issue, just in terms of the number of manufacturers that are actually building drives and the cost associated with those. And when you think about cogs that we’re going to go put in a console — and as you have fewer suppliers and fewer buyers — the cost of the drive does have an impact.

“But I will say our strategy does not hinge on people moving all-digital,” he added. “And getting rid of physical, that’s not a strategic thing for us.”

He also told Totilo that the reports Microsoft had laid off people on the teams responsible for physical games, while true, were more about “alignment of our teams across ZeniMax, Activision and Xbox. So we have teams that are in charge of physical retail, inclusive of selling games in physical outlets. So that’s what the team action was. It wasn’t about us getting rid of the capability.”

Digital gaming has been on the rise ever since it was introduced, and in recent years a number of publishers have seen it make up an overwhelming share of their total sales. For instance, Take-Two just reported earlier this month that 95% of the company’s total net bookings were digital. Though Take-Two is an extreme example, other publishers aren’t far behind, making it unsurprising that companies like Xbox might at least back off of releasing every game as a physical edition. And indeed, games such as Alan Wake 2, and Like a Dragon Gaiden: The Man Who Erased His Name are foregoing discs entirely even as companies like Best Buy start to phase out physical media sales.

For now, it seems Xbox is committed to continuing to offer at least some physical games. But don’t be surprised if more and more games across all publishers go digital in the coming years.

Rebekah Valentine is a senior reporter for IGN. Got a story tip? Send it to [email protected].