Microsoft explains why some Xbox disc games failed offline

Microsoft has confirmed that the recent Xbox service outage should not have prevented users from playing games from physical discs. The company is now investigating why some consoles failed to launch disc-based games during the interruption.
The outage began on the evening of July 26 and continued for almost a day. It affected account sign-ins, application launches, the Xbox Store, and access to both digital and physical games. Microsoft reported that the services had been restored on July 27.
Xbox discs use entitlement checks
Xbox technology chief Scott Van Vliet confirmed that physical games are subject to entitlement checks. However, these checks are not designed to prevent games from launching when Xbox services or an internet connection are unavailable.
“Disc-based entitlement checks should not prevent players from accessing their games and this is by design,”
— Van Vliet, Xbox
Microsoft is reviewing reports from users who could not access games from discs during the outage. The company traced the wider service disruption to an external licensing service. It also identified an issue that prevented some consoles from correctly using entitlement information already saved on the system.
Offline mode also relied on saved licenses
Xbox Offline mode is designed to use those locally stored entitlements. The failure meant that some consoles could not confirm ownership even when the physical disc was inserted, leaving affected users unable to launch games that should have remained available offline.
Microsoft has not explained which games or console models were affected. The company also did not confirm whether a system update will be required to prevent the same issue during another service interruption.
Source: The Verge