Xbox consoles recently experienced a worldwide outage, during which people were unable to access even disc-based games that should have been playable offline. Service was restored within a day but the impact of this discovery could be significant as tensions run high surrounding the crumbling state of physical media. Microsoft, however, was quick to suppress the negative PR, telling The Verge that discs should have never been affected by the outage in the first place.

"Disc-based entitlement checks should not prevent players from accessing their games and this is by design," said Microsoft tech chief Scott Van Vliet. He went on to confirm that discs go through license checks in the form of verifying entitlements. These entitlements determine what content a user is entitled to access, including when said user is offline, since they're saved directly on the console. Van Vliet clarified that the team caught an issue that stopped the consoles "from correctly using saved entitlements during the outage."

Xbox uses the Smart Delivery system for distributing games that automatically installs the best version of the title for your hardware. Smart Delivery has an alternative implementation called full-disc support, where developers can choose to put all executables of their game on the disc instead of relying on a license to digitally download content. That means when you insert the disc, there's no need to even connect to the internet as the file should be ready to run out of the box. That's precisely what failed to occur yesterday.

The outage itself affected everything from log-ins to application launches, and from online play to this strange issue of discs not running as intended. It was tied to an external service provider suddenly going down, and remaining down, for 16 hours. Xbox relied on that external provider for license and entitlement checks, so when a console failed to connect to those servers, it simply locked out players from accessing the game. It worked as fail-close mechanism instead of the fail-open it should have been, at least for discs.

If you're even a little bit tech-savvy, this probably sounds familiar to you as DRM checks have been a part of gaming for a long time. It used to be limited to just digital releases, but disc-based media has evidently fallen to the same problems as of late. The 100GB storage capacity of Blu-ray discs is a genuine limitation, but that's rarely the cause behind stories like this. Microsoft says it's already working on releasing an update to address this issue, but has not provided a timeline.

Sony faced similar vitriol earlier when the community discovered mandatory 30-day online check-ins had been added to PlayStation 5 and 4 consoles, but that claim was later refuted. In 2024 , Steam came under fire for ambiguity over perpetual licenses as well, which just goes to show that even the Valve isn't safe from this great evil. Now that PlayStation discs will cease to exist by 2028, concerns over ownership tied to physical media are growing every day.

Xbox chief technology officer Scott Van Vliet said in a post on X that a licensing service sitting outside Xbox, which the platform depends on, began failing late on July 26 and took roughly 16 hours to clear, blocking sign-ins, library listings, and game launches across Xbox 360, Xbox One, and Xbox Series X|S. Microsoft restored service at 2:30 p.m. PDT on July 27.

For part of that window, Microsoft's status page warned that players might have trouble launching disc-based games, leaving a physical copy sitting in the tray no more useful than a digital one. Discs on Xbox One and Series consoles carry encrypted XVC packages with attached licenses, rather than acting as bootable media, per Microsoft's documentation.

Automated monitoring caught the failure overnight, and on-call engineers declared a major incident, according to Van Vliet, who said the team rerouted traffic onto healthy systems while the root cause was still being investigated. Anything requiring an entitlement check broke, including listing a full library and launching an owned game, and several of Microsoft's publishing and store partners depend on the same systems, which is why some titles kept working, and others didn't. "I care less about the one-line root cause," Van Vliet wrote, saying the review will look at why a failure in one service took down that much and why recovery took as long as it did.

Microsoft hasn't explained why disc-based games were caught up in the failure, but its developer documentation splits loss of connectivity into two separate categories: complete loss of internet service, and loss of one or more online services.

Console behavior is built around the first case, where the system reads a game's manifest declaration and launches anything with a mode of play that doesn't require connectivity. The second case, where the network is fine but a specific service isn't answering, is documented only as something individual games should handle without hanging or crashing. During the July 2024 Xbox outage, players recovered access to installed single-player titles by forcing the console into an offline state through Network settings.

Xbox services also went down last week during the early access launch of Halo: Campaign Evolved, and PlayStation Network took a multi-hour outage of its own on July 24. The timing of all this isn’t brilliant, given that Sony recently announced the end of physical disc production for new games in January 2028.

A Change.org petition opposing that decision has since exceeded 348,000 signatures. Microsoft, meanwhile, is testing a disc-to-digital program that grants a digital entitlement tied to a specific disc, and multiple reports say its next console may ship without a drive, though the company hasn't confirmed that. Van Vliet joined Xbox from Microsoft's Azure organization alongside CEO Asha Sharma, weeks before Microsoft cut 3,200 Xbox roles across its 2027 fiscal year and divested five studios.

Microsoft just released four original Xbox games on PC as part of its efforts to bring backwards compatibility to the platform. For years, Xbox consoles have enjoyed a similar luxury, with the latest Series X|S systems being able to play two-decade-old OG Xbox titles. However, to achieve this on PC, Microsoft used a native x86 version of its in-house Xbox 360 emulator. As you might expect, modders were quick to pounce on the opportunity to run 360 games on PC, with "varying degrees of success" so far.

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The discovery was initially made when data miners looked at the package contents of these backwards-compatible titles. Neo Te Aika found out that they were packaged as standard Games on Demand, or GOD files, which is the official file format used by Xbox 360 hardware. A GOD package contains the actual game, its headers, and DRM. By using a GOD extractor, modders were able to open them and convert them into a base ISO that can be played with an emulator, or on a jailbroken Xbox 360. All this would be a huge development on its own.

What followed, though, has the potential to change the original Xbox and Xbox 360 emulation scene forever. Nathan on X scoured through those same files to find something called Xe03. Also called Fission, Xe03 is Microsoft's official Xbox 360 emulator that comes baked into the Xbox One and Xbox Series consoles for backwards compatibility.

Within the Xbox 360 environment, Microsoft already had another emulator called XeFu, or Fusion, that emulates the original Xbox. So, it's basically an emulator within an emulator. That's how modern Xbox consoles have been able to play OG Xbox titles. To Xe03, it's just opening a standard Xbox 360 package, but the binary inside is coded to launch XeFu, which then takes over to run the original Xbox game

When Microsoft released backwards compatible Xbox games on PC, people expected the company to have built an x86-native OG Xbox emulator from scratch. An emulator that didn't rely on an outer layer or any external components. Instead, what Microsoft did was simply recompile Xe03 to run natively on x86 PCs instead, indirectly handing over the ultimate 360 emulator to the community.

By modifying the app container and swapping out game packages, projects like XWine1 and independent reverse-engineers bypassed the inner OG Xbox layer (Fusion) and managed to load raw Xbox 360 executables (.xex files) directly into Xe03. The results have been mixed but incredibly promising, nonetheless. The XWine1 team was able to get Plants vs. Zombies, Steins: Gate, Fuzion Frenzy, and Midnight Club: Los Angeles to boot and run with varying degrees of stability.

Fuzion Frenzy is actually one of four OG Xbox titles that Microsoft officially released so that one is particularly well-optimized. Since the hard part of reverse engineering first-party code has already been done by Microsoft, optimization remains the only challenge. As time goes on, and the specific emulator files are fine-tuned for general usage, we should expect more and more titles to run flawlessly.

Microsoft has also promised to release more official backwards compatible titles on PC, but it hasn't said anything about Xbox 360 games. Therefore, the discovery of Xe03 holds immense potential for the future of Xbox 360 emulation on PC — the community just has to focus on optimization now. This development can be particularly fruitful for handhelds that are power-constrained; Xe03 has very light minimum requirements for devices like the ROG (Xbox) Ally and Lenovo's Legion Go lineup.

Moreover, Microsoft's PC version of Xe03 also upscales the original 480p output of OG Xbox games to 4K. It also adds built-in V-Sync, anisotropic filtering, enhanced anti-aliasing, and borderless windowed modes. Since the games were distributed though the Xbox PC app, they're part of the Xbox Anywhere program so if you own the digital license of said game on console, you get it for free on PC (and other places). Microsoft will also bring Xbox Achievements support to backwards compatible titles soon.

The last two elements will likely be ignored by the modding community since the OG Xbox virtualization is the important part, enabled by the Xe03 engine that has now become the main takeaway from all this. To be clear, open-source emulators such as Xenia have existed for years and provide a highly-satisfactory Xbox emulation experience, but Microsoft's official, in-house solution should be more efficient.

What OG Xbox or 360 games would you like play on PC?

A Brazilian gamer who lost his Microsoft account and all his digital games has won a court order forcing the company to hand it all back, after support staff told him to simply repurchase his library. The user, who posts as Ordo_Liberal on Reddit, shared a screenshot of a small-claims ruling in the Xbox subreddit that gives Microsoft 15 days to restore access or face fines and roughly $400 (R$2,000) in damages. He said the account had two-factor authentication enabled when it was flagged and permanently suspended, and that none of Microsoft's recovery options allowed him to regain access before he filed his lawsuit.

According to the support emails he posted, Microsoft suspended the account after detecting what it described as unauthorized access, and said an investigation found the account's security information had been changed. The company treated the suspension as permanent and directed him to buy his games again rather than reinstating the ones already tied to the account.

Anyone with a large Microsoft account might want to take note here, because the suspension didn’t target a single game or console but the user’s entire account. Microsoft accounts can carry Xbox purchases, Windows licenses, store apps, 365, and OneDrive data, and a permanent suspension blocks all of it, even, as in this case, when you’ve got strong security and two-factor authentication set up.

Brazil's Consumer Defense Code and its small-claims track allow individuals to bring cases without a lawyer and without paying court costs, meaning Ordo_Liberal was able to take Microsoft to court without incurring any costs. If Microsoft misses the payment deadline, an additional 10% penalty will be imposed. While the damages awarded in this case are minor, it's notable that Microsoft has been compelled to restore the account and its contents, which runs counter to the standard platform position that customers license digital games rather than own them.

This, of course, is a first-instance small-claims judgment, not binding precedent, and it covers one account in one jurisdiction. Courts elsewhere have gone the other way. Chinese courts have recognized game accounts as inheritable property, while U.S. rulings generally treat games as revocable licenses. The case comes as both Microsoft and Sony push players away from physical media, with Xbox testing a way to convert discs into digital entitlements and Sony ending new PlayStation disc production in 2028. Microsoft hasn’t publicly commented on the ruling.

Microsoft's gaming division, Xbox, will eliminate approximately 3,200 jobs over its 2027 fiscal year in an attempt to turn around its floundering business. The cuts include offloading four studios with plans to spin off another, though no announced first-party games are being canceled.

Around 1,600 of those jobs are being eliminated today, and the rest will occur throughout the rest of the year.

"We are operating at margins that are 3-10x lower than comparable platform and publishing businesses," Xbox CEO Asha Sharma wrote in a note to Xbox employees, pointing out that investments in studios and Game Pass did not add as much value as expected. She wrote that the business typically loses 64 cents for every dollar invested. "As that happened, our core business weakened, and we added more teams, more investment, and more time, hoping for a better outcome. And now the industry is facing the most severe hardware crisis in its history. We must reset XBOX." She wrote that she has a goal for Xbox to reach more than a billion people per day.

Xbox is selling Compulsion Games (South of Midnight) and Double Fine (Psychonauts, Kiln), back to their management as independent studios, along with their catalogs, intellectual property, and funding for their next games.

Meanwhile, Ninja Theory and Undead Labs are being sold to unidentified "new ownership" and will continue to work on Senua and State of Decay 3 with Xbox, respectively.

The fifth studio, Arkane, is entering consultation to review options due to France's strict labor laws. The company is currently working on Marvel's Blade and previously worked on Redfall and Deathloop.

In Sharma's letter, she wrote that changes will come to Activision, Bethesda and ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios. Some will focus more on popular franchise games. Bloomberg reports that ZeniMax will focus specifically on its biggest names, such as Fallout, Doom, The Elder Scrolls, Quake, and Wolfenstein.

Mojang and King will report directly to Sharma, who wrote that those two studios are the largest in terms of monthly active players, and bring "critical geographic, demographic, and differentiation to XBOX." But in other areas, Sharma is greatly reducing the amount of management for a flatter organizational chart.

Xbox has also found its first-ever chief operating officer. Helen Chiang, the corporate vice president of the Minecraft business, was promoted to streamlining changes to how the business operates, including "end-to-end P&L responsibility across content, hardware, platform, and services."

"These changes are about a bigger future for XBOX, not a smaller one," Sharma wrote. "The next decade of gaming will be larger, more global, and more creative than anything we’ve seen before. This year, we’ll invest as much in XBOX as we ever have, but we’ll invest with greater focus, greater discipline, and greater clarity, all in service of making XBOX where the world plays and creates."

Microsoft's other recent moves include bringing more games exclusively to Xbox consoles, such as Gears of War: E-Day, returning to an all-caps "XBOX" brand, and more public discussion of Project Helix, the company's next home console that's also set to play PC games.

Sharma was named CEO of Xbox (then Microsoft Gaming) in February, succeeding Phil Spencer. Spencer built up Xbox with major acquisitions of Game Studios and a push to bring Xbox games everywhere with Game Pass.

Price hikes! Get your price hikes here! Hot on the heels of Apple's upward push of dollar figures, ganging up with Framework, and harnessing the disillusion caused by the price of Valve's Steam Machine... It's now Microsoft's turn. The ailing division is enacting yet another increase to the price of the Xbox Series consoles, at $100 more for the 512 GB versions and $150 more for the 1 TB model. The pricing will come into effect in roughly a month and change, on August 1st.

The firm is also killing the 2 TB version of the Xbox Series X, in an echo of Apple slicing away the higher-RAM variants of its Mac Studio computers. If you were on the fence about buying one of those, it would be wise to rush, as at the current price of "only" around $799.99, stocks are unlikely to last. Here's the new pricing, in all its glory:

• Xbox Series S, 512 GB, Digital Edition: $499.99
• Xbox Series S, 1 TB, Digital Edition: $599.99
• Xbox Series X, 1 TB, Digital Edition: $749.99
• Xbox Series X, 1 TB: $799.99

Microsoft is also adding a few options for payment and alternative purchases. Buy Now, Pay Later for splitting purchases across short-term installments for consoles bought at the Microsoft store, confirming rumors of a partnership with well-known payment processor Klarna. If that's not quite your jam, there's also interest-free 12-month financing available at Amazon for Xbox hardware.

The company is expanding Xbox trade-ins, stating that it's "working with retail partners" to enable players to sell their consoles to stores for cash or store credit. This isn't a new thing in the gaming world, as GameStop and Amazon have historically had this feature, but Microsoft's wording makes it sound like the program will be expanded to more retailers. As always, you can buy a certified refurbished console from the Microsoft Store and a number of retailers.

The highly anticipated Steam Machine is being shot down by flak due to its high release price, but all of a sudden, the $1,349 on ask for the 2 TB version doesn't sound so absurd, considering the superior hardware, gigantic game library, and low prices for games. Following Microsoft's logic, the upswing for the now-dead 2 TB version of the Xbox Series X would be $300, putting it at a nice round $1,099.99. Are you not entertained, if not excited, to be living in such interesting times?