Take this with a Master Chief-sized grain of salt. (So I guess a tower of salt.) But video game magazine Edge is reporting that games bought for Microsoft's Xbox 720 will be shipped with individual activation codes, meaning they aren't expected to have any use "beyond the initial user." So, in other words, you won't be able to use your friends' games. Or buy games second-hand from Gamestop or Amazon. If true, this is, charitably speaking, a bunch of shit.
Microsoft’s next console will require an Internet connection in order to function, ruling out a second-hand game market for the platform. A new iteration of Xbox Live will be an integral part of Microsoft’s next console, while improved Kinect hardware will also ship alongside the unit.
Sources with first-hand experience of Microsoft’s next generation console have told us that although the next Xbox will be absolutely committed to online functionality, games will still be made available to purchase in physical form.
We don't know when the Xbox 720 will be released, or even what it'll look like. So there's a lot that can change in between now and its big reveal. But Microsoft is going to get ripped to shreds by the gaming community until it either confirms or denies this report. Just look at what happens every time it's announced that games like SimCity 4 will have online-only DRM. People go nuts. And that's just for one game! Imagine what will happen if an entire console goes online-only and requires its games to include activation codes—no one is stopping that inevitable mutiny from Xbox.
In other words, it might be a good idea to brush up on your Playstation button memory. Because Xbox 720 sales will definitely suffer if Microsoft goes through with this.