Sony Is Abandoning Physical Game Discs. Who Pays the Price?

Editor’s note: A version of this article by 黑狗布雷特 appears on July 27, 2026 on SSPAI with the title “索尼抛弃实体游戏光盘的代价”. Translated and published by agreement.

Disclosure: This article was written with AI assistance.

Should a business that provides a company’s core revenue and profits pursue the safest possible strategy?

For a company as powerful as Sony, the answer is quite different.

In business, the safest option is by no means the best one for a company’s main earnings engine. That business needs to deliver stronger revenue and profits to keep the company growing healthily. Whether a strategy is safe, or whether it maximizes customer satisfaction, is not the company’s overriding concern.

To bring PlayStation into closer alignment with the demands of today’s platform economy, capital markets, and regulatory systems, Sony has chosen its most aggressive—and most attention-grabbing—move: abandoning physical game discs altogether.

This time, though, Sony is dismantling more than a hobby cherished by physical-game enthusiasts. It is dismantling an entire system of transactions that exists outside the industry’s formal commercial channels and belongs to consumers themselves. I’ll spend a substantial part of the final section discussing this underground business model. First, however, let’s start with Sony itself.

The Reality Everyone Overlooks

Gamers, business analysts, and the rumor mill alike have almost entirely overlooked the core composition of Sony’s business. In fiscal 2025, its three entertainment segments—Game & Network Services, Music, and Pictures—accounted for approximately 66.55% of the company’s total business revenue and 70.11% of its profits.

Even excluding Music and Pictures, Game & Network Services alone accounted for approximately 37.55% of total business revenue and 32.11% of profits.

In dollar terms, Sony took in roughly $31 billion in revenue and generated about $3.1 billion in profits from a global video game market worth more than $200 billion.

Across the wider games market, Sony may not rank first, but it holds a firm second place. Nintendo’s fiscal 2025 results were certainly impressive—approximately $15.4 billion in revenue and $2.4 billion in profits—but if we isolate the console market, Sony remains the undisputed leading console gaming brand on the planet.

There’s a familiar online retort to people who think they know better: “You’re telling the world’s number one how to do its job.” Unpleasant as that sounds, reality often bears it out. Almost every article criticizing Sony and PlayStation right now amounts to precisely that.

Like any corporate giant, Sony is looking for a better path to growth from a position of enormous scale and market leadership—at least in consoles. History has shown time and again that “serving every customer well” is not the only way for a publicly traded company to achieve faster growth. And I mean any publicly traded company, including those outside gaming.

For Sony, gradually abandoning physical game discs has become an almost inevitable choice in the pursuit of higher profit margins.

There’s No Getting Around the Supply Chain

The foremost advantage of digital distribution is not that Sony earns more. It is that costs fall across the entire supply chain.

Whether you’re making phones, gadgets, cars, PC components, shoes, pillows, or game discs, there is no escaping the supply chain. In video games, that chain includes not only disc manufacturers and packaging suppliers but game developers, too.

Consider the simplest financial calculation. Sony has traditionally taken a 30% cut as a publisher. On a $70 game, that means Sony still receives $21 even if physical discs disappear entirely.

But remove the roughly $5–$7 taken by disc manufacturers, packaging companies, logistics providers, and warehouses, and the $49 left after Sony’s 30% cut can stay entirely within the publishing business. This does not apply only to Sony’s first-party studios. Any company releasing games on PlayStation—including Microsoft, EA, Ubisoft, Take-Two, Capcom, Sega, Bandai Namco, Koei Tecmo, and Cygames—could retain that $49 within the development side of the business once those supply-chain payments disappear.

Yes, eliminating physical game discs is, in fact, a win-win business proposition.

Since the pandemic, Wall Street and almost every major business operating in the physical economy have also begun paying attention to a tangible concept that most people rarely discuss: supply-chain resilience.

The familiar risks are legion. Can disc-pressing plants produce enough units? Can retailers such as Walmart and Best Buy get stock onto shelves quickly? Will international freight get held up? Will unsold inventory pile up? All these highly unpredictable features of the physical world can disrupt the supply chain for physical games.

If a game leaks before release or flops outright, piracy, retail returns, and inventory write-downs can eat straight into profits. Move sales entirely online, however, and inventory pressure disappears, while the whole supply chain becomes better protected.

Consider a situation in which only a handful of games sell physical copies in a year, with combined sales below one million. If a company keeps its disc-drive and disc-production lines running, their fixed maintenance costs must be spread across fewer and fewer physical-game buyers. The cost per disc then rises sharply, squeezing the gaming business’s profits.

When costs cannot fall as quickly as sales, the only option is to exit.

For companies and industry observers alike, this is no easy calculation. It involves more than basic arithmetic: you also have to weigh different factors and account for investors’ expectations of the future. And that is just the mathematics. Companies must also navigate more complex policy risks, including the corporate-responsibility considerations covered by ESG—environmental, social, and governance factors.

ESG Is More Than Keeping Up Appearances

For a long time, many of us have assumed that Europe’s ESG rules were purely about appearances. But Sony—a company gamers and online communities joke has “become a European company”—faces actual regulatory red lines.

If a listed company such as Sony fails to comply with the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), the consequences extend beyond fines from multiple countries. There is also the prospect of a far more serious reputational crisis.

So even if ESG were merely about appearances, and even as the EU moves to ease scrutiny through Omnibus I, Sony would still have to address it within the prescribed timetable and framework.

One of the first things Sony can do is cut carbon emissions by eliminating physical game discs.

Conventional wisdom holds that digital media are not necessarily environmentally friendly. Environmental research from around 2014, including coverage in Yale Environment 360, suggested that the electricity consumed by servers, content delivery network (CDN) nodes, and home broadband connections when downloading games tens of gigabytes in size could generate more emissions than transporting a Blu-ray game disc by truck. But that static comparison overlooks the exponential improvements in network transmission efficiency over the past decade.

Public disclosures from the past two years show that Microsoft Intelligent Cloud, Google Cloud Platform (GCP), and Amazon Web Services (AWS)—which supplies infrastructure for PlayStation’s cloud business—have all reported matching 100% of their electricity use with renewable energy in certain regions and time periods. Environmental groups have criticized some of the accounting as a numbers game. Still, because renewable energy involves publicly documented projects across different countries and regions, these records can, in most cases, demonstrate that cloud providers are indeed reducing emissions through greener energy.

These examples support the sustainability of digital games from a carbon-footprint perspective. In an exclusive report published by GamesIndustry.biz in late 2025, Théo Nicolau-Guillaumet, a research and methodology expert at the French carbon-accounting company Greenly, said manufacturing and packaging one million discs could emit 312 metric tons of carbon dioxide equivalent (tCO2e). By comparison, downloading the same number of digital games, at roughly 70 GB apiece, would emit just three metric tons.

Sony’s group-wide ESG commitments call for carbon neutrality in its own operations by 2030 and net-zero emissions across its entire value chain by 2040. In carbon accounting, indirect emissions across the external value chain—Scope 3 emissions, as they are known in the EU—are typically both the largest component of a technology company’s footprint and the hardest to control. For Sony, Scope 3 accounts for 95% of group-wide emissions, with electricity consumed by consoles after sale alone representing roughly 58% of that Scope 3 total. Sony does not separately disclose the share attributable to game-disc production. Even so, the broad breakdown suggests that eliminating physical game discs could reduce the group’s Scope 3 emissions to some extent.

Greenly’s latest research also points out, however, that although disc manufacturing carries emissions costs associated with rare earths and precious metals, transportation, waste processing, and landfill disposal, prolonged, large-scale downloading and playing of digital games will soon become an important issue for developers and publishers. Major companies may, before long, have to reduce emissions by optimizing games, issuing updates less frequently, and extending the useful life of consoles.

Are Players Still Buying a “Product”?

Readers and players following this issue will probably already have heard the familiar business advantages. Abandoning physical discs lets Sony eliminate the secondhand market, keep almost all digital-game revenue within the PlayStation ecosystem, gain unprecedented control over global pricing, and dramatically improve player profiling. It also enables more flexible pricing on its digital platform.

But there is a deeper factor here, one obscured by the global games industry’s sharp contraction after the pandemic. It is also one of the industry’s most consequential directions of change.

That brings us to a question almost every gaming community has debated since 2013: are the games we play video game products, or digital gaming services?

We need to recognize what has changed. In the past, we did indeed play products called video games. Today, their character as products is fading, while digital services packaged as products are becoming increasingly common.

Take Grand Theft Auto Online, or GTA Online. Whether you call it an online game or a live-service game, it has received numerous major updates over more than a decade, adding new content, modes, vehicles, and more. Those updates have generated billions of dollars in revenue for Take-Two and Rockstar.

If you actually play GTA Online and follow its community, you will know what I mean. Much of the impressive GTA-related sales performance over the past two years has not come from copies sold. Shark Cards and GTA+ subscription fees are the real heavy hitters. That revenue is also the main reason Rockstar keeps updating GTA Online.

Online commentators tend to overlook the players who do not join the debates or sign petitions to “stop Sony killing physical discs.” Both PC Gamer’s exclusive interview with Newzoo and Circana’s research on the North American market point to a stark, almost extreme reality. PC and mobile players who regularly play Roblox, and console players who regularly play Call of Duty, tend to spend their time on other live-service games as well, rather than traditional immersive single-player blockbusters or indie games.

Put another way, these players care little about whether they will still own a game in the future. They care more about what they are creating now, what they are putting into it now, and what kind of service they are experiencing now.

All right, I know: you, the person reading this, only play Call of Duty for the campaign. But stop and think—how long has it been since you bought a new Call of Duty?

Concord may have died almost on arrival. Destiny 2 and Marathon may have suffered successive setbacks. Sony may have spent the past year repeatedly insisting that immersive AAA experiences are PlayStation’s competitive moat. None of that means the enormous shift toward digital services and games as a service (GaaS) waits for Sony’s permission.

Sony has simply taken the most aggressive step in the direction the industry is already moving.

Unless digital-game sales suddenly collapse, or governments launch antitrust investigations and impose binding rules on digital ownership or platform openness, Sony is unlikely to stop moving away from physical discs. The frustrating reality is that no one can prevent this change.

In an interview published by VGC, Michael McGrath, described as the chair of the EU’s consumer protection committee, said that freedom of business and contract allows game companies to decide how they deliver their products and services.

Hundreds upon hundreds of comments beneath official PlayStation posts, both in China and abroad, criticize or mock Sony’s decision. Since Sony announced the news on July 1, the anger has continued for a full month.

Kantan Games CEO and independent consultant Serkan Toto put it this way: “I have a great deal of sympathy for fans of physical games, but there is no chance Sony will reverse its decision. It anticipated the community backlash before making the announcement and is now simply waiting for the storm to pass.”

Only when players leave en masse—as GTA Online players did after its summer update, causing its operating metrics to plummet—will developers and publishers respond with concessions and reversals. Even then, such attempts to win players back are unlikely to satisfy those who want to truly own physical games.

How Many Copies Make a Game a Success?

Soon after the announcement, people began questioning Sony’s figures for the share of games sold digitally, arguing that it had overstated digital sales.

The brutal reality, however, is that data can be cross-checked. Matt Piscatella, an analyst at the well-known research firm Circana, posted on social media: “In the week ending July 11, 2026, two PlayStation games sold 10,000 physical copies in the entire United States. As of July 11, seven games had sold 100,000 physical copies in the United States in 2026.”

This is something of a digression, but I think it deserves a closer look.

If those figures referred to Japan, many people would probably think the physical-game market still looked fairly substantial. Games aimed at the domestic Japanese market generally have limited staffing and resource budgets; a small game selling tens of thousands of copies can support its developer, publisher, and supply chain alike. But the world does not revolve around Japan’s domestic market.

The Yakuza series, now known as Like a Dragon, offers a useful example. In the PS2 and even PS3 eras, Ryu Ga Gotoku Studio needed to sell only somewhere between a little over 100,000 and a little over 300,000 copies to promote a game around the world as one of its biggest hits. Even in the PS4 era, Yakuza 0 took a year to sell one million copies.

Only as the series embraced digital distribution, added more languages, and reached more platforms did the pace and volume of sales improve significantly. Remakes of older Yakuza games also began to show considerable staying power. The series, now comprising a dozen or so games, has sold a combined 27.7 million copies.

The variables behind that growth are clear: changes in distribution and market reach.

Now look west. Since its April 24, 2025 release, Clair Obscur: Expedition 33 has sold eight million copies in a little over a year. Awards, marketing, and word of mouth have all played a part. But by the standards of the 2020s, a million copies is usually only the starting point for a series such as Yakuza, which attracts considerable attention both inside and outside gaming circles. Granted, sales above one million can cover costs and turn a profit for games such as Yakuza and Clair Obscur: Expedition 33. For larger, more expensive modern AAA productions, however, even a million-plus sales may not cover the budget. That is why underperforming games are so often shelved and their development teams laid off or disbanded.

As GaaS commands more of consumers’ and players’ attention, measuring success purely through unit sales is also becoming less useful.

Single-player games sold for a one-time purchase still need to prove themselves through sales. But live-service games use more complex payment models, and unit sales cannot adequately capture their popularity. Major publishers therefore began treating concurrent player counts, time spent playing, and in-game behavior as their most important measures of GaaS engagement relatively early on. As short-form video swept the world and shaped the attention economy, these metrics became even more commercially important. Their underlying logic is simple: the longer players stay on a gaming platform or inside a game, and the more they do there, the more willing they become to spend—and the more frequently they spend.

This is one of the core reasons Sony keeps pushing into GaaS. Once its game sales platform is fully digital, Sony will be able to capture all the data from every player on PlayStation.

Harsh as it sounds, for today’s platform companies, player data has itself become a new productive asset.

The Physical Game Rental Market Facing Extinction

What, then, is the cost of Sony eliminating physical game discs altogether? This is the question I most want to explore.

For a small subset of physical-game enthusiasts, console game rentals may be even less acceptable than digital games. They may find the history harder still to stomach: physical game rentals were already widespread among console players in the early 2000s.

In North America’s highly developed console market, physical retailers such as GameStop effectively served as rental platforms for many players. Someone would buy the latest soccer game, football game, or Call of Duty at full price, finish it, and then trade it in, paying only ten or twenty dollars to get the next soccer game, football game, or Call of Duty. Before DLC-based methods of identifying secondhand copies became common, stores would also sell used games for just $10 less than a new copy.

Almost every game company, Sony included, loathes this model of game “rental” that operates entirely outside its commercial channels.

The reason is simple: all the profits from those secondhand discs go to the store. Console makers, the supply chain, publishers, and developers do not receive a cent. In the less digitally connected 2000s, those transactions could not be tracked either. No one really knew how many times a game had been sold or how many people had played it. As a result, sales figures for games such as Yakuza in the PS2 and PS3 eras may have been substantially understated because of secondhand trading and physical “rentals.”

I know this is difficult to accept, but the reality is that improving internet infrastructure, the global expansion of cloud computing, and the rapid spread of digital storefronts such as Steam have made digital games far more convenient than physical ones. More and more players have therefore turned to digital purchases, producing a situation in which only a handful of games in the entire United States have sold physical copies in the low hundreds of thousands this year.

Money-saving tricks know no borders. Mainland China may have a distinctive games market, but search for game rentals on the e-commerce platform Taobao or the secondhand marketplace Xianyu and you will still find all kinds of rental businesses. Whether you are looking for Xbox, PlayStation, or Nintendo consoles and games, there are services renting out hardware and content. These include not only physical games but gaming accounts as well.

To be fair, this is a perfectly reasonable proposition for consumers who simply want to try a console and its games, or casual players who are short of money but have time to spare. If we elevate the discussion to whether consumers actually own the content, however, they lose on almost every count.

The paradox is that these services have never really disappeared from the vast gaming economy. If anything, they have become more established and organized in recent years.

China is an enormous market, with close to 700 million gamers—about 60% of its internet users. Even if just 0.5% of those consumers want to rent games, that could sustain a niche market. And rental businesses often also offer shared gaming spaces, buy and sell used hardware, and repair consoles and controllers, so their potential customer base is likely larger still.

In shopping malls in some of China’s larger cities, physical shops rent out consoles and games and provide seats and televisions for customers to play on-site. They bundle rentals into monthly, quarterly, or annual plans, with prices ranging from tens to hundreds of yuan, serving players who can visit from nearby commercial and residential neighborhoods. At the extreme, some stores do not sell consoles or games outright at all. They offer rentals only.

Because these services depend heavily on customers’ trustworthiness and local acceptance of the business model, physical rental shops are largely confined to China’s biggest and most economically developed cities. Elsewhere, businesses rely more on online platforms that provide credit scores to rent out physical games, consoles, and accounts.

Libraries in some countries and regions also lend physical game discs, either free of charge or for a fee. Bloomberg journalist Jason Schreier briefly introduced the free game-lending service at a public library near him on his own channel. Much as with borrowing a book, a few simple formalities let you take home a game you want to try. You just need the corresponding console and hardware at home.

Because of the particular conditions of China’s market, game discs cannot enter libraries, and console game rentals are relegated to the same gray-market category as account rentals for PC and mobile games. Yet renting consoles and physical games is still some distance from a gray-market business; the term “game rental” itself simply carries strong negative connotations. At the same time, this niche remains highly speculative. Add Nintendo’s new game-key cards, Sony’s approaching January 2028 policy, and the growing proximity of disc-free PlayStation consoles, and physical game rental shops may rapidly disappear after 2028. We may then lose all open, commercial channels for renting—or even trading—physical games.

In most countries, libraries primarily have a preservation role and receive government support and voluntary private funding. The importance of keeping physical game discs in their collections therefore far outweighs their commercial value. But with consumers rapidly becoming less dependent on physical media, and future Xbox and PlayStation consoles set to include models without disc drives, these libraries also face substantial operating pressures. Rental businesses, meanwhile, have no obligation to preserve physical games. If demand disappears, they will abandon game discs as quickly as possible.

The collateral damage from abandoning physical game discs may be devastating. But given the combined pressures of its business outlook, capital markets, and regulation, Sony is almost certain to press ahead.