The second system, meanwhile, would be a "revised" Xbox One S that would lower costs but still include a disc reader. It's fully aware that some people still prefer physical games and wants to cater to them, according to the insiders.

Microsoft declined to comment to Engadget on the rumor.

It wouldn't be outlandish to axe the disc drive. Cost-cutting notwithstanding, optical drives just aren't as vital as they used to be. If you rarely visit the local game store and prefer Netflix or Amazon for your movie viewing, why pay for hardware that will largely go unused? The question is whether or not console makers will ditch discs altogether. That isn't certain even for Microsoft's future Scarlett consoles, the sources said, and they may not completely go away until it's virtually guaranteed that gamers around the world have reliable broadband.