A widespread Xbox service outage began late on July 26 and lasted into July 27, preventing players from logging into their accounts, accessing digital game libraries, and playing games online [1, 2, 3]. Unexpectedly, some users reported being unable to play physical disc-based games during the outage, despite discs normally working offline [1, 2, 3].

Xbox Chief Technology Officer Scott Van Vliet confirmed that disc-based entitlement and licensing checks usually allow offline play and should not stop access to physical games during service interruptions. He said, "Disc-based entitlement checks should not prevent players from accessing their games, and this is by design" [1]. Van Vliet added the company was investigating reports of players unable to use physical discs during the outage and noted, "Offline mode is also designed to rely on those saved entitlements" [2].

The outage stemmed from a failure in an external licensing service that Xbox depends on, creating a single point of failure that impacted multiple Xbox services [1, 2]. Xbox identified that some consoles did not properly use stored game licenses, or saved entitlements, causing problems when launching physical disc games offline during the outage [2, 3].

Xbox apologized for the disruption and said it is developing a software update to fix the problem and prevent future outages from blocking offline access to disc games [2, 3]. The company is also testing a new "Positron" feature designed to let players convert physical discs to digital licenses, allowing digital ownership transfer if discs are sold or gifted, though this feature remains under development [1, 3].

The outage renewed concerns among players about digital game ownership and the risks of physical discs requiring online license verification [3]. Just days earlier, Sony's PlayStation Network suffered an unrelated outage on July 24 that affected access to digital games and apps but left physical discs mostly unaffected [1].

Xbox resolved the service outage by late July 27 after about 24 hours of disruption [1, 2, 3]. On July 29, CTO Scott Van Vliet acknowledged that some physical disc games were indeed affected and announced plans for an upcoming fix to address the issues [3].