There seems to be a widespread perception that Microsoft has given up on physical games, especially for Xbox. However, it seems a new statement from Microsoft gives clarification on the situation.

As reported by Gamer Social Club, indie game developers in particularly had been claiming in public that Xbox requires “an absolutely MASSIVE minimum order” of physical copies of games so that they can greenlight making them.
While Gamer Social Club tried to reach out to other developers for clarification, Microsoft themselves released a statement that seems to have surprised pretty much everyone.
This was Microsoft’s response:
Xbox has no minimum order quantity for physical media. Retailers, studios and partners make their own decisions based on what they feel is best for their business and players. If a developer wants to make physical copies of their Xbox games, they should get in touch with us to learn how to get started.
As it seems, a lot of developers didn’t know that this was Microsoft’s policy at all. It looks like this was an issue with Xbox’s communication, but we also can’t discount the possibility that Xbox themselves were victims of misinformation.
While studios making bigger games may find it more cost effective to mostly sell their games on digital, smaller scale games such as indies could still justify bringing their games on physical. In effect, smaller scale games usually mean smaller file sizes, and that means they’re easier to print and produce on discs or cartridges, whether that’s Xbox, PlayStation, Nintendo’s cartridges, Evercade’s cartridges, etc.
Furthermore, they don’t have to deal with the big performance bugbear that AAA games have to deal with in 2025. The rapid pace of progress in game development has outpaced the physical limits of physical discs. As a result, even newer PlayStation 5 and Xbox Series X|S games that are ostensibly ‘complete’ on disc install themselves on the console’s internal SSD.
But if the games aren’t AAA, they won’t need to be on SSD to push performance to the maximum. It would make more sense if these games still had to be read via laser on disc to be played, since the impact on performance won’t be as high.
As things stand, many of these smaller games from independent developers and publishers have limited print runs. If these developers can still sell these physical games on Xbox, they should take advantage of the opportunity. As even Sony can’t deny, there aren’t enough PlayStation 5 gamers buying new games to keep game development sustainable, and these smaller devs need to work to spread their reach as wide as they can.