Microsoft is developing another Xbox model and it doesn't require physical discs. The new Xbox One version will rely on digital downloads for gameplay, according to Thurrott. It takes advantage of the same technology inside the Xbox One X and the Xbox One S, but you'll be able to store everything on the console or in the cloud.

It won't be part of the next-generation Xbox models, though. Microsoft's separating this from the Scarlett family due out in 2020.

Without the optical disc drive, the price of this video game console drops significantly. Microsoft could sell it for as little as $199. As for its other Xbox models, the starting price is $299. There's also a payment plan offered by the Microsoft Store. Needless to say, this will be affordable.

You might be able to purchase it in the first half of 2019. Thurrott says Microsoft's simplistic product is "well on its path to production." So consumers wouldn't be left waiting until the holidays for it. Still, maybe it'll be held off until Microsoft's Xbox event at E3 2019.

The disc-free Xbox model also introduces a disc-to-digital program. If you already own physical copies of Xbox One games or purchase them in a retail store, you can convert them to digital downloads. It's essentially a trade-in program for the same game.

As for the future of Xbox, Microsoft's gaming brand should be getting more than one model from the start. The Redmond-based company could roll out a flagship like the Xbox One X as well as a cloud-focused alternative. Both would give consumers more choice between the type of experience that fits their lifestyles.

Microsoft hasn't decided whether or not its next flagship will feature an optical disc drive or go the disc-free route. Based on the report, it sounds like a decision will come soon.

Project xCloud remains a priority, too. The technology will use cloud services to place Xbox games on consoles, computers, and mobile devices. It'll get a beta sometime in 2019, but Microsoft won't rush development as there are too many variables.

Quite clearly, Microsoft views services and subscriptions as an important revenue driver in the years ahead. It's sold Xbox Live for over a decade, and Xbox Game Pass added another layer. Xbox Game Pass lets subscribers dip into a pool of over one hundred games for just $10/mo. Add in the payment plan for the hardware, and it's not so expensive to be in the Xbox ecosystem.