DO PS5 GAMES WORK WITH EXTERNAL USB HARD DRIVES?
They do not. Even USB SSDs are far, far slower than the PS5’s built-in storage, so all PS5 games must be installed to the console’s internal SSD.
If you were hoping to be able to use a large external hard drive as “cold storage” for PS5 games — i.e., clearing space on the internal SSD by moving installed games to a USB HDD, rather than deleting them and having to re-download them later — that’s unfortunately not an option. (This is presumably because Sony doesn’t want to confuse people who might expect that if they could move a PS5 game to an external drive, they’d also be able to play it off of that drive.) In fact,
the PS5 doesn’t even let you copy PS5 save files to a USB drive; the only backup option is cloud storage, which is available exclusively for PlayStation Plus subscribers.
Anything goes for PS4 games, though. You can copy them from a PS4 to a PS5 using Sony’s built-in data transfer feature, and/or put them on a USB 3.0 drive that you plug in to the PS5. You can play PS4 games directly from USB storage to get some performance improvements, or move them to the PS5’s internal SSD to take advantage of upgrades like further reductions in loading times.