At the beginning of February there was a rumor that Microsoft intended to make the Xbox 720 require an Internet connection to function. In doing so, it would ultimately wipe out the used games market for the next-gen console. That rumor has now been backed up by a document included with the Xbox development kit for the new hardware, known as the XDK.
Installing the XDK opens up access to the help documentation and a page titled “Durango Hardware Overview.” Now this document is marked as preliminary and subject to change, but goes into detailabout what to expect the Xbox 720 hardware to include.
The key part of this document is in paragraph 6, which states that every Durango console will include a hard drive big enough to hold a “large number of games.” The machine will also not support “play from the optical disc.” The next paragraph details how games will ship on Blu-ray discs, must be installed, but will allow play to start as the installation is happening (similar to the system Sony is using for the PS4).
In a different section of the document it is detailed that the console will be always on and always connected. So Microsoft is going to employ low power states rather than wanting you to power down the console completely. The always connected part is explained as allowing both the games and the system to be “always current.”
There’s a chance this information is relatively old, say 12 months, but it seems unlikely Microsoft would have changed its mind on such core functionality of the hardware. It looks pretty clear to me that all games will need to be installed, the optical drive won’t be used at all for games beyond allowing installations, and an Internet connection is a must.
The fact games don’t use the optical drive and media post install would mean you could give the game to someone else to install. Microsoft won’t accept that so it looks pretty much guaranteed you’ll have to activate your game online and therefore tie the copy to your account. In other words, no game trade ins or a used game market.