It looks like Microsoft may already be preparing Xbox players for a future where discs are no longer a part of consoles. With rumors saying the next Xbox, known as Project Helix, may not have a disc drive, the company is now testing a way to turn physical Xbox discs into digital licenses.
According to a report from The Verge by Tom Warren, Microsoft engineers are testing the new system. Evidence was also found inside the Xbox app for PC, where the code included the string “enable Disc2Digital.” The process is designed to be simple. Players insert a game disc into an Xbox console with a disc drive, install the game, and launch it. Xbox then grants a digital license, also known as a digital entitlement, to the Microsoft account signed in on the console.

The digital license works just like a game purchased from the Xbox Store. If the title supports Xbox Play Anywhere, it can also be played on PC and handheld devices. If it is available through Xbox Cloud Gaming, Game Pass subscribers can stream it as well.
To stop people from buying a game, converting it to digital, and then immediately selling the disc, Microsoft has built in a protection system. The digital license remains linked to that specific physical disc. If the disc is sold or lent to someone else, the digital license automatically moves to the new player’s Microsoft account when they insert the disc into their Xbox. The previous owner immediately loses digital access until they get the original disc back. The system is designed to keep the used game market and game sharing between friends working while still offering the benefits of digital ownership.
The feature also supports multi-disc games. It is currently being tested for Xbox Series X and Xbox One game discs. However, older physical games from the Xbox 360 and the original Xbox are not included in the current testing phase. As more information becomes available, we’ll make sure to let you guys know here at GameObserver.