On July 27, a large portion of Xbox's online infrastructure went down, preventing many players from logging in or accessing their digital games. Some players also reported being unable to play physical, disc-based games during the outage.
That night, Xbox technology chief Scott Van Vliet posted an explanation on Twitter attributing the extended outage to an external licensing service that began failing and triggered a series of related issues. He promised a full post-incident review, though his initial statement did not address the reports of physical games being affected.
Speaking to The Verge afterward, Van Vliet said Xbox is looking into reports that some players couldn't access games using discs during the outage, stating that 'disc-based entitlement checks should not prevent players from accessing their games, and this is by design.' He confirmed physical games are subject to licensing checks, but said those checks should not have blocked access during the outage or while a console is offline.
Van Vliet said Xbox has identified the issue that caused some consoles to fail to correctly use 'saved entitlements' during the outage, adding that offline mode is designed to rely on those saved entitlements. He said Xbox plans to roll out an update in the future intended to fix the problem so that disc-based games can be played offline without issue during any future outage.
Coverage of the incident noted that Xbox consoles install games to the hard drive regardless of whether they are physical or digital, with the disc serving as proof of ownership rather than the sole source of the game data—meaning there is a digital component even to disc-based play. Commentary accompanying the reports also pointed to broader industry trends, including a coinciding PlayStation outage affecting a beta test, Sony's planned all-digital shift starting in 2028, and the rise of formats like Nintendo's Game-Key Cards, which raise similar concerns about server dependency for physical media.