Sony Ends Physical Game Production by 2028 Sparking Digital Ownership Debate

Is this the end of physical gaming? Sony recently announced that they will be ending the production of physical games in 2028. This has sparked an outcry from gamers the world over and suspicious silence from other gaming companies. So, how did we get here? Why do they think they can get away with this? And what is the real reason it's happening now? Hello Internet. Welcome to Game Theory, the show that sometimes appears physically in the flesh rather than as a digital cutout, which means it's time for us to talk about the wider gaming world. And yes, I have been keeping up

with the news. I mean, how could I not? It is all over my Twitter page. Practically every other post has been about it. The news that by 2028, Sony will no longer be making physical games. Everything will be digital only. And like I said, the internet did not take this news lying down. They were mad about this. People were claiming that this was the final trigger towards the end of gaming ownership as we know it. And while they are absolutely not wrong, I too have been incredibly frustrated and disappointed by this news, this issue goes much deeper and much further back than you'd initially think. Sony is the one under heavy fire right now, but

this isn't just a Sony problem. This is an industry issue. Other gaming companies like Nintendo and Xbox have remained suspiciously quiet during the whole ordeal, which seems strange when Xbox has been posting a lot recently. And one tweet dunking on Sony could easily have won them the next generation of the console war before it even began. But they haven't, and that's because this is something that all of them have been plotting towards for a while. Nintendo started selling physical copies of Tony Hawk's Pro Skater 3 and 4, Skyrim, and Fallout 4 with just a paper code in the box. Or for games like Sonic X Shadow Generations and Pocopia, they technically have a cartridge, but it's really just a

Reports from The Verge have mentioned that Xbox is looking into how to turn your current physical disc collection into digital versions in time for the next console generation. The caveat though, is that if you were to then give that disc to your friend and they create a digital copy, your digital version would stop working. But with so much new information appearing all over the place all of the time, I wanted to compile all of the facts in one place along with some theorizing because well, duh, so that you guys would have the whole picture. We are going to look back at the history of digital-first gaming, user ownership and licensing, and the reasons being given for this decision in order to figure out how we

got here, why it's happening now, and how this ties into a business strategy that I don't think anyone has really noticed yet. So, crack open whatever box you have because Lord knows it might be the last time you can as we look inside to figure out the secrets of this physical versus digital debate. The first thing to look at is where this decision has come from. A lot of fans have been feeling like this announcement was just dropped out of nowhere. But when you take a step back and look at the last decade or so, you start to see that this push actually started a long time ago. The year was 2013. GTA V was just released, Breaking Bad had just wrapped, and Kingdom Hearts III had been

announced to be in development. So, it should just be right around the corner, right? But that same year, Xbox unveiled the Xbox One and their new strategy involving a digital-first ecosystem. What that meant was that your console required a constant connection to the internet in order that they could check that you had a license for the game and access the game via the cloud instead of on the disc. What that meant was Xbox essentially made your gaming discs a license key. Putting it into the console gave you permission to download the game and you actually wouldn't need the disc after that moment other than to prove your purchase. You wouldn't own the game physically. Huh,

sounds familiar, right? Ironically, this is where PlayStation came in and showed that for PS4, you could just share your physical copies. So, after intense backlash from the community, Xbox chose to backpedal and revert to a more traditional method, allowing discs or digital download to work as they always did previously. That's good. They submitted an idea, the fans spoke, and they made a change to reflect that. And it's proof that we did it once, we can do it again, right? Well, not exactly. They didn't totally do away with the whole idea of digital-only, and Sony was actually doing the same. When both Xbox Series and PS5 were announced, both had no disc drive options, costing $40 to

$50 less than their disc version. Making this optional kept fans happy, but as soon as I saw it, I realized that clearly these companies were trying to steer us in a certain direction. Digital games had been available for a hot minute, but by making the digital option cheaper, it incentivized those who were already building their digital libraries to make that switch, as well as those who couldn't afford the higher price points. And this is back in 2020. This was made even more clear when the PS5 Pro released as a digital-only model. If you want to play PS5 titles to the best of their ability, you had to go digital, unless you wanted to once again shell out for their custom disc drive.

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have your back, too, so long as you go to chime.com/gametheorists or scan the QR code on screen and open up a Chime account today. Thanks again to Chime for sponsoring this video, but back to the discussion about physical versus digital media. However, despite the industry's clear push to digital, the people spoke with their wallets. In 2024, PlayStation's disc drive consoles made up 82% of all console sales. So, despite the push for digital from Sony, people clearly still wanted discs. Sony claims that the reason for moving to completely digital is that 85% of game sales were digital in 2025. Given these numbers, it seems like a pretty obvious decision. But, you know me, I'm the kind of guy who loves to double-check the math. And it turns out

it isn't quite as clear-cut. That 85% includes all games they offer, any game available, even ones that are digital exclusives and don't give the option of physical. If you go on the PS5 online store and filter out DLC, add-ons, free-to-play games, there are 7,451 games on that store as digital only. As of right now, there are only 1,120 physical copies of PS5 games. Suddenly, this 85% of games sold being digital is kind of obvious. It's not because there's a preference, it's because that there are 6,331 more digital games available than physical. And this isn't just a Sony thing. Microsoft reported that 91% of sales were digital, and Nintendo said their digital sales have begun to creep

over the even split at 54.6%. Although they also suffer from the same issue with roughly only 50% of Xbox Series X games being available physically. But, thanks to the Insomniac leak, we can actually get a more direct idea of what gamers prefer when they do have the option. Their biggest titles, games like God of War, Lego Star Wars, Astro Bot, Spider-Man 2, Ghost of Tsushima, Ratchet & Clank, Returnal, The Last of Us Part 2, and Sackboy had more physical purchases than digital. Some by a massive margin. And while other games like Assassin's Creed Mirage, Resident Evil 4 Remake, and Hogwarts Legacy did have a marginal preference towards digital, it wasn't stark. It was more like 50/50. So, it's just a lie. Gamers prefer physical over

digital. Sadly, even though that is much more the case for Sony than they make out, those numbers may not carry over to the whole industry. Yes, Xbox has the same issue with counting digital sales, but the difference is that their digital-only console, the Xbox Series S, was 75% of their console sales, leaving only 25% for their disc counterpart, the Series X. Unfortunately, we don't have a massively like we did with Insomniac to know whether that made a difference to individual games, but anecdotally, I do know a number of people who just went full digital because of things like Game Pass. And that's not even talking about Steam, which is a fully digital platform. Now, I know there are some

caveats to that. Trust me, we will be getting there. But, what I'm saying is, while it may not be quite as big a part of the community as they want us to think, there is a shift going on whether we like it or not. Despite this small shift, it is clear that physical is very popular right now. And the reason for that isn't just that people like having a bookshelf full of game cases, although that is quite nice, it's an issue of ownership. Fans fear that by only having digital versions of the game, Sony, Microsoft, Nintendo, anyone can just pull the game from being played at any given moment. And this suspicion is totally founded. Regularly we see games being pulled from online

stores. Sometimes you can be lucky and if you have already got the game downloaded, it will still run, which is exactly what happened with the 3DS eShop. Or games like Kingdom Hearts Union Cross, a game that is crucial to understanding the lore of Kingdom Hearts 3 and what the heck is even going on in the Kingdom Hearts 4 trailers. The most famous example is PT, a Silent Hill demo that was made by Kojima. It was pulled from stores and now, outside of a few consoles that have the game already downloaded, the lore is just completely gone. But sometimes if a digital game is removed or its online services are shut down, it's gone permanently. Games like Battlefield 2 on Xbox and Steam have multiple games just

unplayable after server shutdowns. It's not just random multiplayer games either. Tron Evolution has been taken down from Steam and even if you have the game downloaded, it will technically boot as per Steam's TOS, but you can't play because there was a license issue that Disney didn't renew and so the game is unplayable as a result. Even more recently, Sony announced 551 movie title purchases through PSN would be removed due to licensing. And as I was writing this script, Nintendo announced that they would be pulling Mario Kart Tour from the App Store and shutting down the servers with no offline option available. This is what the Stop Killing Games movement is all about, petitioning game developers and

governments to maintain support for games even after their run cycle and server shutdowns. This is why people want physical games. By having the game physically on a disc, the game will always be playable and so there's a level of ownership we have over the thing we bought, even if the game is removed from digital stores. I remember having a PS2 and you could just buy a disc and play it immediately. Want to play another game? Take that old disc out, put the new disc in and go for it. If Xbox or Nintendo or Sony or anyone had said this game is discontinued, it wouldn't matter. You still had the game in its entirety on the disc. But

remember when I said everyone got real mad at Xbox for trying to make discs a license for a download with no game data on them? They may have dropped that idea back then, at least partially, but that doesn't mean anyone really stopped. In the PS3 Xbox 360 era, while games still remained solely playable on discs, overall it was recommended to download the game that was on the discs directly onto the console's HDD. This was to ensure fast load times, but it wasn't mandatory. The game could still run on the disc itself. The next generation, however, made this download mandatory. The disc still contained the game, but after the initial download your disc just became a license key,

only able to play the game downloaded on your console if the disc was present. Games were getting larger and the disc could no longer hold the full game. A high definition Blu-ray could only contain 100 GB of data and so games like Halo Infinite and Call of Duty: Modern Warfare II had a lot of audiences angry because the disc only contained 72 GB of the game with the digital download being 150 GB, meaning physical owners were missing 78 GB of the game that had to then be downloaded when first booting it up. A digital download was required one way or another. A big reason developers will have a game disc with half a game on it is because it gives more time for them to make the game better. You may have

heard of the day one patch, a software update for a game that is available the same day as the game launches. This update includes bug fixes, performance enhancements, and even extra content just not put onto the disc. The reason this happens is because it takes time for discs to be made, games to be put onto those discs, and then shipped to retailers ready for release day. All of that takes about eight weeks. That's eight weeks developers can continue to improve the game before release day, which they see as a better than the alternative. Games like 06 completely tarnished Sonic's reputation because the game was unfinished and janky as anything. And part of that was because they had to account for the eight-week

release schedule. And once the game was put on the disc, that was it. But if developers had an extra two months to keep fixing bugs, maybe those games would have been smoother. However, I think that's worse. By giving companies a way out, it means they don't have incentive to be better. Sonic 06 was a mess, but it pushed Sega to be better. Sonic Unleashed was fine, and then Sonic Colors and Generations were certified bangers. Future titles are more questionable. Maybe they got a little full of themselves, but that's a different discussion. They improved at this moment because they messed up, and that mess up was permanent. As of right

now, the majority of discs are still playable if you own them. A study was done on over 700 PS5 discs, and 93% of them were fully playable offline with zero downloads or internet checks. And so it's understandable why we want physical discs. Even if the base game is bad, we get the game without the fear of it being taken away at some point. Or so you'd think. Ubisoft's The Crew was a game that was released on physical disc with only 16 GB of game initially, which easily fit onto a base disc. But in March 2024, the game was shut down. And I don't just mean the online servers were shut down. Even putting the disc into your console did nothing. It was literally unplayable even with the

physical disc. Gran Turismo 7 was 87 GB all on disc, but because it was an always-online game, when servers went down for maintenance, most of the single-player modes were useless with no campaign and no ability to collect new cars or tracks. Thankfully, right now, according to the same study, only 4% of games are completely locked behind a check-in or download. Clearly, the majority of games don't. So, we still own the majority of our games if we go physical. And that's true up until a point. Because while you have a physical copy in your hands that works, we need to understand that the word ownership is a legal term with a legal definition. It means you have recognized rights to

possess, use, control, enjoy, and transfer an asset. And even though having a game physically feels like you can do all of that, according to the end-user license agreements, we don't have that. As you might expect, people sued Ubisoft for The Crew. And the statement released to counter the lawsuit was that players never had ownership, only a limited license to access the game. Which was really when people started to realize that buying didn't mean ownership, and that companies had been hiding it in the fine print. It revealed what we feared. We were buying a license, not a game. And this is extended to people who own the physical discs thanks to that same end-user license agreement. In October 2024, Steam included a disclaimer when purchasing games that

said, "The game is licensed, not sold. Your license confers no title or ownership of the game or copies thereof." Sony, Microsoft, and Nintendo all include similar statements in their user agreements, saying that you are purchasing a license and not owning the game, even if it's a physical copy. Here is the exact wording of Sony's end-user license agreement section 1.4, quote, "The software is licensed to you, not sold." They use the word software, meaning the literal code of the game. And in their physical media warranty, it says, "If the software is purchased as physical media," meaning both physical and digital are regarded as software, and we are merely purchasing a license.

This isn't a recent development, either. By looking at some older user agreements, I found that this language was used in the Nintendo agreement for the original Nintendo Switch, almost 10 years ago. This is the sad reality that even these physical discs with the full game on, in the eyes of the law, we don't own them. Especially as we agreed to these terms when we purchased a disc and put it in our console. And while all of these games are still fully playable, technically speaking, all it would take is a single time to connect to the internet or a console update, and the global license could be voided and the disc get bricked, because these companies simply decided that they were done, which sucks.

I'm not trying to say any of this to be defeatist or a doomer about it. There is still time for us to make our voices heard and try and shift the tide. I'm simply saying it to make us fully aware of the reality here, where if you want to be a console gamer in the future, it's likely going to mean no new consoles and no online play if you want to avoid these licenses being voided. But when I realized all of this, it made me wonder, why bother with this announcement if we've supposedly not owned our games for decades at this point, and if digital sales are on the rise, why draw attention to it and spawn

videos like this one? The simple answer is money. The more complicated answer is also money, just not for the reasons you're currently thinking. You'd have to have been living under a rock to not know that AI is causing huge shifts in the hardware market, upping the demand for things like RAM, which in turn makes them more expensive, driving up the cost of all consoles currently on the market and increasing projected prices for future consoles. The Steam Machine was meant to be $750, but now it's over a grand. PlayStation similarly expects their next console to be $1,000 or more. And Project Helix, Xbox's next console, is believed to be $1,300. That is a lot of money for these consoles and a lot of people just won't

be able to afford them. So, these companies are looking for how to increase their profits despite less people buying. Removing hardware like physical disc drives is part of the equation and so is removing the physical cost of producing physical copies. Nintendo is well known for their demand for cartridges despite the more costly price to manufacture, around 12 to $15 per cartridge. This has been the reason in the past that people haven't wanted to work with Nintendo and more recently it means indie developers have to charge that much more for their game and that can just deter fans. So, a digital-only option like Silksong or Deltarune can sell for 20 bucks cheaper and more appealing and saving production costs

for both developers and Nintendo in the long run. Production for discs isn't quite the same story. Both Xbox and PlayStation discs cost more like $6.50 per disc, a lower cost but a cost nonetheless. But there are still many more costs to making and distributing physical games. The logistics of physical games, that's their shipping and storage, is about 5% of the retail price. So, $3.50 on a $70 game. Then there's the retailer's cut. Obviously, stores that have the games out on display are going to want a cut of the profit because they're using their real estate. This is estimated to be around 30%, so $21 on a $70 game. And if you're a third-party developer, you also have a licensing fee that you have to pay to

PlayStation or Xbox or whoever storefront you're on. And that's about 10%, so another $7. If you sell it digitally, however, the first-party games take home the entire $7. And for third parties, rather than shipping and licensing fees, the retail cut instead gets replaced with an online store fee, which is also 30%, meaning Sony and Microsoft and Nintendo take home a bigger cut directly from those third parties. So, immediately you can see the appeal for these companies. That's a lot of revenue for their shareholders. But, that's just the simple answer. The fact is these companies are still currently looking to sell game boxes with digital codes in them, which will still have all of the fees and cuts associated with

them, at least until places like GameStop, Target, Walmart, Best Buy and decide they've had enough. No, there's another big financial benefit that I believe these companies are seeing, one that relies more on our own psychology and will make the shareholders real happy because it fixes two of the biggest problems they faced in recent years: gaming subscriptions and live service games. Right now, both PlayStation and Xbox are running an online subscription service, Game Pass and PlayStation Plus. Both are running tiered systems where Essential is your cheapest one and basically only gets you online access. PS Plus does give you two monthly games and Xbox offers 50 curated games. The next tiers, like Premium and

Extra, have more to offer. Game Pass Premium gives you access to new release games 3 to 6 months after they release and 200 of the games from their library. PlayStation Plus Extra gets 400 PlayStation games from their library. Then, both offer a top-level tier, Game Pass Ultimate and PS Plus Premium. Ultimate is the only one which gets you day-one first-party releases, like Bethesda games or anything from Xbox Game Studios, as well as the entire 400-plus game catalog. PlayStation Plus Premium has classic PS1, PS2 and PS3

titles for streaming. They also offer trials and Sony Pictures Core, their movie streaming service. But, here's the thing. These services have had wildly mixed results. In March of this year, PlayStation reportedly had 50 million subscribers across these tiers. And according to their June report, 38% so 19 million people are subscribed to the two higher [snorts] tiers. However, that means 62% are only subscribed to the cheapest tier. And given the PS5 sold nearly 100 million units, that 50 million number means that at least 50% of the fan base isn't bought in at all. And that's not even including the 120 million PS4 owners, some of whom never upgraded to PS5 to begin with. Xbox is doing even worse with it, only having 30 million

subscribers thanks to them raising their prices in October of 2025 by million subscribers. New Xbox CEO Asher Sharma recognized this price hike hurt the service and brought it back down, but has also recently recognized that Game Pass has largely just been a failure. But, he neglected to mention what the future plans are for the service, which is telling when they've been quite open about other things they're letting go of, like employees and studios. And that's because they do have a plan for it, but it requires all of us getting over the psychological hurdle that is a digital-only future. Because the cost of games is so high, 60% of US gamers only buy two or fewer games per year. At most, these companies are making $160

off of you per year. Oh, and wouldn't you know it, that's the price of our most expensive plan. Why don't you just pay for that? That way, you get hundreds of games for the price you were going to pay anyway. But again, remember I said two or fewer games. What this does is entice you with logic and promise of more games, games you otherwise may not play because you can't afford it. But it locks you in so that they are guaranteed to make that max two game price, rather than you maybe only buying one game this year, or worse, buying games that aren't the full $80 price tag. But, a big reason people don't buy into this logic right now is because of this idea of physical ownership. So, if these companies can

rip the band-aid off and force us to get over owning physical, suddenly these digital-only services feel like really good value, and we'll subscribe or upgrade our fit. And I feel confident they're wanting to lean into more consistent, reliable income, thanks to what they've said and done with live service games. Sony CEO has said their most played games on PS5 are all live service. And within those, microtransactions have become Sony's biggest money maker. Helldivers 2, MLB The Show, Gran Turismo 7, and Destiny 2 are cited as the four live services contributing to the sales and profits in a stable manner. And we recently heard from Xbox that Minecraft, while not what most people think of when they think of

live service, was actually the game propping up the business. In-game microtransactions generally make up 32% of total console revenue, and the average gamer now spends about $147 per year on microtransactions. This shows the power of reliable income, and explains why they try to create so many new live service games, which mostly failed. Concord, an 8-year $200 to $400 million multi- player shooter, shut its servers in just 2 weeks after launch. And multiplayer offshoots of God of War, Spider-Man, Last of Us, and Twisted Metal were being developed, but were all quietly canceled. However, once again, a big reason why people don't spend more money on microtransactions is

because one, if I've spent $80, why would I keep paying for more? But two, this game could just disappear, and all that money is gone with it. So, if people move past the they don't actually own any of the games and they get these live service games for free as part of their subscription packages, then suddenly the $10 you spend each month on a skin or map or DLC doesn't seem like all that much. It's almost like goal math from a psychology standpoint. Do that once a month and suddenly the industry has got you spending $120 on top of your $160 subscription. And because you don't own anything anyway, you'll likely just do what makes you happy in the moment.

Whether that's extra missions or looking like a stretched out pomni. This is why the industry is moving away from physical discs. In their minds, ownership was never part of the question. They just want to push us past the mental hurdle in order to encourage us to move our attention and money towards things that make them continuous income and revitalize the areas of the business that are currently floundering. I want to be clear. I'm just sharing with you guys the facts and some speculations based off the data I've seen. I do not like this direction for the industry. So, what can I or you do about it? I recognize all of this sounds

a little doom and gloom, but there are a few things available to us. Obviously, you can vote with your wallet. Just don't buy games. You can support great causes like the stop killing games movement, who have been fighting this fight for ownership and user protections for a while and faced a lot of opposition from the EU and California governments. But, they're trying again, so support them. There's a petition going around on change.org that currently has over 300,000 signatures, which you can sign. And it sounds cliche, but you can write to your local government official wherever you are. Brazil and Mexico have proposed bills that will protect gamers ownership. There's a lawsuit in the UK over PlayStation's monopoly of the

digital ecosystem. And there's a consumer group in the Netherlands that have filed a $457 million lawsuit over the pricing on the digital store and lack of consumer protection. The EU right now says that it can't do anything about physical disc production, but it did force Apple to switch everything to USB-C. And they absolutely do have issues with monopolies and antitrust behavior. I will leave links to all of that down in the description below. I don't know for sure if any of this will move the needle, but we have to try, right? And that's not a theory, it's a fact. Most of this has actually been facts, but of course, there's always going to be a little bit of theory, a little bit of game theory.

Thanks for watching. World premiere on Game Theory. Eventually, we will see mascot horror die off. Well, I called it.