CyberConnect2 CEO Hiroshi Matsuyama recently shared a video on his social platforms discussing the impact of the diminishing use of physical game discs on the video game industry, including his own company. The video is part of a series where he addresses inquiries from new employees about the gaming sector.
Following Sony’s announcement that it will cease physical releases for the PlayStation starting in 2028, and with Blu-ray manufacturers in Japan beginning to withdraw from the market, many gamers are apprehensive about how this transition will affect the industry overall – particularly concerning issues like media preservation and the concept of owning digital content.
In the video, Matsuyama contends that a complete move to digital game distribution would be “entirely beneficial” from a developer’s standpoint.
He starts by addressing the disparity in revenue between physical and digital releases. He clarifies that physical editions depend on a low-margin, high-volume approach to turn a profit. Since CyberConnect2, along with other game developers, must purchase discs and cartridges directly from Sony and Nintendo to produce physical games for their consoles, transitioning fully to digital would eliminate these expenses entirely.
“Culturally, physical copies were the norm, so I understand why some people might be reluctant to see them disappear. However, currently, they can’t compete in terms of convenience,” Matsuyama remarks. Referencing recent instances with Capcom and Square Enix, he notes that over 90% of game sales are now from digital downloads, with physical copies accounting for less than 10%. In this context, Matsuyama suggests that maintaining production lines for such a small portion of sales is impractical.
“Developers earn their living, and figuring out how to increase profits and sales is a professional necessity. If you want to release physical games even if it means cutting salaries, then fine, I can arrange that – but I doubt anyone would agree to that,” Matsuyama states.
Although he believes continuing to cater to “a small group of collectors and enthusiasts” is unsustainable long-term, Matsuyama doesn’t foresee physical “packages” vanishing abruptly. Boxes containing a download code along with extra content or merchandise will still exist, specifically to cater to collectors and dedicated fans, he suggests. Discs, however, “are destined to fail,” he adds.
Matsuyama specifically points out that modern games are too large to fit on physical media. “We’re in an era where a single game can exceed 160GB or 200GB in size. GTA 6 is too large for a physical disc, and Blu-ray discs are limited to 80GB, so how many discs would you need for that? I don’t think burdening customers with such inconvenience is a smart move. If you check the maximum capacity of a Switch cartridge, you’ll see that games today are too big to fit. That’s why they’re moving to digital releases,” he argues.
Matsuyama clarifies that while he understands many will be saddened by the decline of physical media – admitting he feels sad himself – “those of us in the entertainment industry need to show people what the future looks like.”
“I believe it’s crucial to make that transition. As for the consequences, there will only be positive outcomes; profitability will grow much quicker, and developers will receive larger bonuses.”