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If I buy a physical copy of the game on my xbox one S, and then upgrade to a series X down the line, will my copy of Valhalla also upgrade to the series version, or will only a digital copy upgrade to it?
Yes you will be able to transition to Xbox Series X down the line using the same physical disc
More info on that can be found here: https://support.ubisoft.com/en-US/faqs/55917