Eliminating Physical Discs May Lead to Higher Game Prices and Fewer Sales: Focus Shifts to Profit and Control

Sony is set to phase out the production of physical PlayStation games by 2028, marking a significant shift in the gaming landscape. This decision comes amid a long-term decline in physical sales, and it has sparked considerable backlash online. However, it also raises important questions about which companies might follow suit, the implications for pricing and sales, and who stands to gain or lose from this transition.

As Sony prepares to end physical disc production, analysts predict a range of consequences beyond simply not having physical PlayStation games anymore. For instance, the upcoming PlayStation 6 and Xbox’s Project Helix are likely to launch without disc drives, leaving players with extensive libraries of physical games from previous consoles unable to play them on the new systems. Daniel Ahmad, a research director, noted that 70 million physical PlayStation games were sold last year, with around 500 million sold during the current generation. This substantial number could prompt Sony to explore options for helping gamers transition their collections, such as offering an add-on disc drive or a disc-to-digital conversion program.

Both options may come with costs, potentially frustrating players further. With rumors suggesting the next PlayStation could be priced as high as $1,000 and lacking backward compatibility for physical games, many gamers may find this a dealbreaker unless Sony can facilitate a smoother transition.

“I hope they’ll use that extra margin to lower the cost of their devices,” said an industry expert. “With a $1,000 console becoming a reality, manufacturers are looking for ways to control costs. Eliminating discs improves margins but will likely require greater storage capacity, which is also becoming more expensive.”

As mentioned, moving away from physical games gives Sony a significant boost in software margins. Currently, producing physical games is costly, and fewer consumers are purchasing them, leading to lower profits for publishers. Analysts have provided varying figures, but they all point to a similar conclusion: the digital market is rapidly expanding. For example, only 13 percent of total game sales were digital at the PS4’s launch in 2013, but by 2025, that figure had surged to nearly 80 percent. Ahmad noted that digital sales accounted for 85 percent of Sony’s most recent quarter, while Xbox’s digital sales were around 90 percent.

The financial benefits of digital sales are substantial. Dr. Serkan Toto from Kantan Games estimates that PlayStation earns about 50 percent more revenue from first-party games sold digitally compared to physical copies. This is due to the high costs associated with manufacturing, packaging, shipping, and retailing physical games, as well as the impact of the used game market, which allows players to resell games without any revenue going back to Sony.

“Every disc sold is a unit of value that the platform holder stops earning from once it’s sold,” explained an analyst. “A disc can be resold multiple times, with revenue flowing to players and retailers instead of the platform. Without discs, that value converts into a fresh full-price digital sale, which is more beneficial for Sony.”

The future of the second-hand market looks bleak if neither Sony nor Microsoft includes disc drives in their next-gen consoles, which could severely impact retail game sales and undermine the pre-owned market.

“Many retail chains have significantly shrunk over the past two decades and have diversified to adapt to the shift toward digital sales,” noted an analyst. “Ending physical media will require innovation in digital game sales to replace lost business. This could lead to publishers maintaining physical sales longer than they might have otherwise.”

We might see an increase in sales of digital codes packaged in boxes or special collector’s editions that include digital codes. However, this shift could negatively affect niche publishing labels that specialize in physical editions of games.

“Digital-only games have been re-released as collectible packaged versions by specialist publishers,” an analyst pointed out. “Moving away from physical formats diminishes this opportunity. Not including the full game in collector’s editions also reduces their appeal to collectors. With PlayStation stepping back, fewer units can be sold, impacting the viability of new releases. We expect boutique publishers to adapt to traditional publishing roles, which is already happening.”

While digital codes and collector’s editions may provide temporary relief, the overall trend suggests ongoing challenges for retailers. “There’s nothing retailers can do,” said an industry expert. Stores like GameStop will need to pivot to selling other products or face closure.

Some analysts believe that the transition away from physical games has been a long time coming. “This didn’t come out of nowhere,” one noted, referencing Rockstar’s recent announcement that GTA 6 would be released without a disc. “The biggest game in the world going disc-less was more of a starting gun, and now Sony has followed suit.”

When discussing whether this marks the end of physical games, opinions varied. While many agree that Sony’s decision accelerates the decline of physical media, they don’t believe it will disappear overnight.

“Sure, this is one of the nails in the coffin, but coffins need several nails,” said an analyst. “Many players will be unhappy with these decisions, but physical media will last as long as console manufacturers allow it, and we’re now one step closer to its demise. It’s a sad day for gaming.”

Another expert suggested that the coffin has been buried for some time. “Technological progress often outpaces social change,” they said. “While audiences have resisted the shift to digital distribution, I don’t think physical game sales will vanish entirely. Instead, I predict that physical copies will become a premium offering for dedicated fans, as they can be made scarce and collectible.”

Additionally, the disappearance of physical games could lead to price increases. With companies like Sony saving money from this change, they gain more control over pricing, discounts, and the absence of cheaper used copies.

“Sony will control the entire pricing landscape when everything is digital,” an analyst explained. “With the base price of major games now at $80, that control is incredibly valuable. The community reaction since the announcement has been largely negative, with many fearing that games will never go on sale again.”

This shift poses a significant concern for consumers, especially given rising costs. However, there may be a silver lining for game developers.

“Before pressing a disc, a game must clear first-party certification, which happens months before release,” an expert noted. “This often leads to rushed builds that focus on certification rather than polish. A digital-only title allows developers to finalize their builds closer to launch, which could be crucial for studios under pressure.”