Digital sales now dominate as Square Enix and Capcom show how fast physical games are fading

Physical games are not dead yet, but the numbers are becoming harder to ignore.

Square Enix and Capcom have both reported huge digital sales shares in their latest financial results, showing how much the console and PC market has shifted away from discs and cartridges.

Square Enix sold 26.8 million games during its last fiscal year. Out of that, 21.7 million were digital copies, while 4.98 million were physical. That means digital made up 81.3 percent of Square Enix’s total game sales.

Capcom’s split is even more extreme. The company said digital sales made up 93 percent of its total game sales, up from 90 percent last year.

This does not mean every player prefers digital. Physical collectors are still vocal, and many people still care about ownership, resale, preservation, lending, and having a real copy on the shelf.

But publishers are looking at sales data, and the data clearly favors digital.

The hardware market has already been moving in that direction. Sony launched the PlayStation 5 Digital Edition, then made the PS5 Pro dependent on a separate optional disc drive. Microsoft launched the Xbox Series S without a disc drive and later released an all digital Xbox Series X.

Nintendo remains the biggest exception. Physical releases are still more important on Switch and Switch 2, and some publishers are still trying to offer proper cartridge based releases instead of Game Key Cards. But even there, the wider industry trend is moving toward digital access.

The next console generation will likely reflect this shift. If publishers are already seeing 80 to 90 percent of sales come from digital copies, platform holders have less reason to make disc drives standard. Removing the drive can lower hardware complexity, reduce costs, and push more players toward storefront ecosystems.

That is why rumors around Xbox Project Helix possibly skipping a disc drive feel believable. Microsoft may still need some kind of disc to digital system for older physical libraries, but the direction is clear.

The uncomfortable truth is that physical games now serve a smaller audience than before. They still matter for collectors and preservation, but they no longer define the business.

Square Enix and Capcom’s latest numbers make that clear. Digital is not the future anymore. For most major publishers, it is already the present.