Microsoft has created a new patent that demonstrates a method for validating physical Xbox game discs to digital game entitlements. This disc-to-digital patent seems to have been created recently, though the concept is not a new one: as far back as 2018 (two years before the Series X|S was released) it was reported that such as disc-to-digital scheme would be implemented for the digital-only iteration of the next-gen Xbox.
Digital distribution of games is becoming more and more common, with both Sony and Microsoft releasing digital-only versions of their next-gen hardware. And even in the case of some physical releases (Halo Infinite being one well-known example), a digital download is required to fully install and play the game.
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How exactly the disc-to-digital conversion would work remains unclear, but it seems that the process would begin with users uploading a physical game's licensing details to a server network to gain access to a digital version of the game. The patent information doesn't seem to address whether the game disc would be usable from there, though it would be likely that if so, users would be required to check in from time to time.
No doubt this would be a very exciting feature for Xbox Series S users and those who haven't made the next-gen leap from Xbox One as of yet. Though many patent ideas don't see the light of day, it seems highly likely that Microsoft would want to implement such a feature. Love it or hate it, it appears that the future is digital when it come to gaming.