Last month, Xbox announced a move that seemed to be aimed at preserving players’ physical libraries,allowing users to acquire a digital license of their physical gameswhile PlayStation walks unflinchingly to a discless future. What sounded like a net positive for everyone involved has run into its first snag, as Xbox Insider members are reporting that some companies may be opting out of the service.
When users have tried to add Sega, Ubisoft, Square Enix, and Bandai Namco games to their digital libraries after inserting their disc copies, they have received messages saying that these games are “not participating in digital licensing.”Kotaku‘s own Ethan Gach received it when trying to play a Ubisoft game on his Xbox.
Fans have been testing out physical games anddocumentingwhich ones don’t seem to work with the service, and while most games are converting without issue, games from those four companies in particular have given players trouble.
When Xbox officially announced the feature, the company said that it would be a gradual rollout, so it’s entirely possible that these games just haven’t been added to the list yet and could come at a later date. However, the language of “not participating” and the fact that it’s coming up for multiple games from each of these companies has some fans concerned that they may be opting out of the feature altogether, meaning that if you own a physical copy ofKingdom Hearts III, you might not be able to play it on a discless device without purchasing it again through a digital store.
We’ve reached out to Xbox, Square Enix, Sega, Bandai Namco, and Ubisoft for comment on the situation and will update this story if we hear back.
Update 9/8/2026, 1:35 p.m. ET:Ubisoft was the first to respond and told us to reach out to Xbox. So we’ll update the story further if we hear anything from Microsoft.
Update 9/9/2026, 8:45 a.m. ET: Ubisoft’s games now seem to be working with the service following an overnight update.Kotaku was able to retrieve a digital license for Watch Dogs 2, though still got an error for Watch Dogs 1. That could because of an issue with the readability of the particular disc being tested. Games like Kingdom Hearts 3, however, still tell Xbox users that their publishers are not currently participating in the program.
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