CyberConnect2 CEO Hiroshi Matsuyama recently posted a video on his social media talking about how video game companies, and his company specifically, will be affected by the gradual decline of physical game discs. The video is part of a series, largely posted on TikTok, in which he answers new hires’ questions about the video game industry.
With Sony announcing that it will be discontinuing physical releases for the PlayStation starting 2028, and as Blu-ray manufacturers in Japan begin to exit the market, many gamers are concerned about how the shift will impact the industry as a whole – especially from the perspective of issues like media preservation and “ownership” of digital content.
However, in the video, Matsuyama argues that a total shift towards digital game distribution would be “nothing but a positive thing” from the perspective of game developers.
First, he mentions the issue of the difference in profit earned from physical releases vs digital downloads. Specifically, he explains that physical copies heavily rely on the low-margin, high-volume strategy in order to be profitable. Since CyberConnect2 and, by extension, other video game developers have to buy discs and cards directly from Sony and Nintendo to be able to produce physical games for the respective consoles, going fully digital means these costs would be reduced to zero.
“Culturally, physical copies were a normal thing, so I understand why some people might dislike to see them gone. However, nowadays, they can’t win in terms of convenience,” Matsuyama notes. Citing the recent examples of Capcom and Square Enix, he explains that more than 90% of video game sales currently come from digital downloads, with physical copies taking up less than 10%. In that sense, Matsuyama suggests that it’s not realistic to keep the production lines running for less than 10% of sales.
“Developers work for their salaries, and thinking about how to raise profits and boost sales is something you must do as a professional. If you want to release physical games even if it means that salaries will be reduced, then sure, I can make it happen – but I don’t think there’s anyone willing to do that,” Matsuyama says.
While he considers continuing to work “for a minority of collectors and enthusiasts” is not feasible in the long run, Matsuyama doesn’t think physical “packages” will disappear so suddenly. Boxes containing a download code with extra content or bonus merchandise are still going to be a thing, specifically to cover the niche of collectors and diehard fans, he suggests. Discs, on the other hand, “are doomed to fail.”
An issue Matsuyama raises specifically when it comes to discs is that modern games are too large to fit on a physical CD. “It’s a day and age where a single game surpasses the size 160GB or 200GB. GTA 6 is too big to fit on a physical disc, and BluRay discs are capped at 80GB, so how many CDs would you actually need for that? I don’t think delivering something so inconvenient to customers is a good thing. If you look up the maximum capacity of a Switch cart, you’ll know that games now are too large to fit. That’s why they’re shifting to digital releases,” he argues.
Matsuyama explains that, while he understands many people will be sad about physical media fading away, admitting that he himself feels sad about it, “we in the entertainment industry need to show everyone what the future holds.”
“I think it’s important to make that shift. As for what kind of impact it will make, there will be nothing but positive things, profitability will rise much faster, and developers will get more bonuses.”
