Following the reveal of 1,900 job losses across various Xbox teams earlier today, more news continues to trickle in about exactly which teams have been affected, and some of them are apparently focused around physical games.
According to Windows Central's Jez Corden, Microsoft has "shut down departments" related to bringing physical Xbox games to market. He advises that Xbox isn't necessarily quitting retail, but things are clearly changing internally:
"Microsoft has also shut down departments dedicated to bringing Xbox games to physical retail ... which if you've seen the digital-only Xbox console leaks ... well, you can get an idea of where Microsoft is going here."
"Note: reducing retail teams doesn't confirm Microsoft is quitting physical retail for Xbox games yet, they can outsource, and might be consolidating here. So, don't run with "Xbox is quitting physical" based on this. But, it does seem to be the industry trajectory. Writing is on the wall."
As referenced here, a large-scale leak in 2023 revealed that Microsoft is (or was) seemingly preparing to launch an all-digital Xbox Series X model, leading to speculation about the company exiting the physical market eventually.
Corden also mentioned today that Microsoft is basically laying off the entire customer support teams for Activision Blizzard King games aside from a select few of them, with plans to outsource the rest to external companies abroad instead. He noted that a large number of Community Managers have been affected by the layoffs as well.