The limited storage capacity of the Xbox Series X/S has been a concern for gamers, especially with modern game sizes constantly increasing. The current 16TB limit for external hard drives can easily be reached, particularly for Xbox Series S owners who only have 512GB of internal storage.

Addressing this issue, Microsoft is rolling out a new Xbox Update Preview that enables support for external USB drives exceeding the previous 16TB cap. This change requires reformatting the drives, which will then be partitioned to maximize storage space for games and apps. These partitions will appear as separate devices in the storage devices list.

Xbox has also acknowledged and addressed a performance issue affecting some apps, causing lag after extended use.  This fix is included in the update.

This update is a significant step towards providing more flexible storage options for Xbox owners.  Larger storage options will become increasingly important as game sizes continue to grow.

While the Storage Expansion Cards offer a convenient plug-and-play solution, their high cost can be a barrier for many. The ability to use more affordable, larger-capacity external drives offers a welcome alternative, potentially encouraging gamers to embrace digital purchases and consider the Xbox Series S as a viable console option.

It's important to note that there are some known issues with certain drives larger than 16TB not displaying correct information and free space. Microsoft advises against formatting drives exceeding this size until these issues are resolved. As this update is currently in preview testing with Xbox Insiders, such initial problems are expected and will likely be addressed before the wider release.

The update also includes enhancements to the user interface, making it easier to find discounts on games.  A new badge will highlight discounted titles directly on the Home screen for a select group of users.  Further refinements include improvements to Narrator readout in Settings, and updates for accurate local language display throughout the console.