According to people familiar with the matter, Microsoft is internally testing a new feature called "Disc-to-Digital" for the Xbox platform, which will allow players to convert existing physical game discs into digital version licenses to continue to access their game library in the future.

This move is seen as an important part of Microsoft's preparation for the next generation of Xbox consoles, especially after Sony announced that it would stop producing PlayStation physical game discs, and the industry is generally expected that Microsoft will soon follow suit.
Currently, Microsoft employees are already testing this feature internally, and the relevant code appeared in the Xbox PC app as early as May, including references to "enable Disc2Digital". It is understood that "disc to digital" will support Xbox One and Xbox Series X game discs, but will not work with Xbox 360 or original Xbox games. Judging from the test information, this function is more to serve recent generations of console users, migrating the physical game libraries they are still using to digital form.
In terms of specific usage, players only need to insert a supported game disc into the console, and the system can complete the installation of the digital version of the game and bind the play authorization. This process requires the user to log in to the Xbox console with a Microsoft account, and the system will generate a digital version of the "entitlement" for the corresponding physical game and correspond to the disc one by one. If the player lends this disc to a friend or tries to use it under another account, the digital license corresponding to the same disc will be transferred to the new account.
Microsoft's internal documents show that the behavior of this "digital rights" is basically similar to purchasing games directly from Microsoft's digital store. Once authorized, the game can be played via cloud streaming as long as it supports Xbox cloud gaming and the user subscribes to Game Pass. Users can also access the same digital game on a PC or handheld device if the game is an Xbox Play Anywhere-labeled cross-platform title.
This "disc-to-digital" feature also applies to game discs bundled with consoles, as well as multi-disc game titles, providing players with the same content access as the original physical version, including downloadable content (DLC) that usually comes with the disc. However, Microsoft also internally reminded testers that some Xbox One discs may not be able to participate in this program. "Depending on how and when the disc is produced, it may not have the technical features we need in this project."
It is worth noting that the disc itself can still be used normally after being "digitized" and will not be "invalidated". Players will only lose digital rights to the game if they lend or sell the disc, as the corresponding license will be transferred with the disc to the new owner's account. Microsoft is still in the internal testing phase, and the outside world is expected to have more official instructions or release information about this feature in the next few months.
Regarding plans for the next generation of Xbox consoles, Microsoft has not yet finalized whether to retain a built-in optical drive in the new console code-named "Project Helix." If Helix ultimately adopts a "disc drive-less" design, then this "disc-to-digital" function will become a key tool to connect the physical game library of the old console with the digital ecosystem of the new console, helping existing players to seamlessly continue their game collection when upgrading their hardware.