Well this could be a good thing if it means steam quality sales coming to consoles. Used games were the biggest barrier to that.
I don't see why it would.
Microsoft already offers a direct-download service for a limited library of Xbox games, and scans your library for recommendations, etc. Nothing is ever cheaper than 20 bucks, and games retain their full retail price long after a used hard copy would drop a little.
One of the great things about used titles is that you can find a game that's older, but still highly popular (say, a Red Dead Redemption, or Mass Effect 2) for 25 bucks or less...and you know that when you're done with that game, you can recoup at least 10 of those dollars on a resale. On the direct download, it's going to be at least 30, and for some games, even 50 or 60.
If there is no downward pressure for hard copy used games, why would Microsoft ever put those games on a substantial sale?
The fair way to get around this is with DLC features, not by obliterating the second-hand market.
The problem with this is that Microsoft will not:
A) Offer really steep discounts like Steam does
B) Offer ease of migrating between different systems
C) Have mod support
D) Have good and proactive customer service
As someone who does a lot of used games purchasing, there's really no reason for me to buy a console anymore. I don't know what Gamestop's answer to this will be. Sony will probably have something similar. They've been beating the drums on how used games are the "worst thing in the world" for awhile, just so when they finally pull something like this out, they can try to limit the backlash.
Is the mod community really that large in console gaming? Seems to be only the hardest of the hardcore could care about that sort of thing. Migrating between different consoles has never really been very easy either, has it? Except with Nintendo I suppose.
I don't know about deep seated concerns with their customer service, but I'm a casual enough gamer that I might not be aware of them.
The constant requirement to be connected to the internet is a
major drag though, for people who prefer single player games. Storing data to clouds etc means that if some reason I'm having internet connectivity problems, I can't save or use my game? I already see this with the most recent NBA2K series and I hate hate hate it.