This week, Microsoft’s gaming division underwent mass layoffs, reportedly including the shutdown of departments responsible for the distribution of physical games. On Thursday, the company announced its intention to lay off 1,900 employees across Xbox, Bethesda, and Activision Blizzard.

These layoffs appear to be extensive, affecting multiple areas of Microsoft’s gaming operations, from customer service to development. “Microsoft has also closed departments tasked with getting Xbox games onto store shelves… if you’ve caught wind of the leaks about digital-only Xbox consoles… well, you might have a hint of Microsoft’s direction,” stated Jez Corden, editor at Windows Central, citing his sources.

“It’s important to note that reducing retail teams doesn’t necessarily mean Microsoft is completely abandoning physical retail for Xbox games; they could be outsourcing or consolidating in this area,” he added.

Legal documents leaked in September revealed potential key aspects of Microsoft’s gaming strategy for the upcoming years, including plans to introduce a “delightfully all-digital” Xbox Series X console, codenamed ‘Brooklin.’ Although plans may have shifted, the documents indicated a target launch in November 2024 and a price point of $499.

“With some AAA games on Xbox now boasting over 80% digital shares, this isn’t all that surprising,” commented Daniel Ahmad, director of research and insights at Niko Partners, in response to Corden’s revelations. “It certainly indicates the trend for the next generation,” the analyst added.

While most AAA titles currently have both physical and digital releases, some are exclusively available for download. Notable examples include last October’s release of Alan Wake 2 and Xbox’s upcoming Hellblade 2, set for release in May.

Last June, Mat Piscatella, an analyst at Circana (formerly NPD), predicted that digital-only releases for consoles would become the norm in the next few years. “Digital-only AAA releases are already here,” he wrote. “This trend will accelerate over the next two years, and by around 2028, I believe it will become standard for most Xbox and PlayStation releases. Nintendo might not move as quickly, but then again, it’s Nintendo, and they’re always full of surprises.”

Source: VideoGame Chronicles