Many service like live TV will still work offline.
One of the biggest controversial rumors surrounding the upcoming new Xbox, codenamed Durango, is that it will require an internet connection at all times. There has been talk that once it's disconnected from the Internet, the console will supposedly suspend apps and games after three minutes, and then throw up a network troubleshooter. When there is no internet connection, apps and games cannot be started, meaning console owners won't even be able to watch a movie without a connection.
But that may not be the case at all. Microsoft reportedly sent an email to all employees working on the next-generation console, and explained that the console will not have an always-on requirement. Owners will still need an Internet connection as they do with the current Xbox 360, but many services will work without it, including single-player games.
"Durango is designed to deliver the future of entertainment while engineered to be tolerant of today's Internet," the email states. "There are a number of scenarios that our users expect to work without an Internet connection, and those should 'just work' regardless of their current connection status. Those include, but are not limited to: playing a Blu-ray disc, watching live TV, and yes playing a single player game."
Interesting. The "live TV" aspect seemingly verifies that the console will serve as a set-top box, meaning it will reside between the HDTV and the customer's cable box or DVR (or even replace them), meshing content pulled in from the local cable provider with other video services like Hulu Plus, Netflix and more. Kinect 2.0 will undoubtedly allow users to navigate through all that content using voice commands and gestures.
As for playing single-player, previous report indicated that games will come on a Blu-ray disc, but install directly to the hard drive like PC games. If an internet connection isn't required during single-player mode, then games will likely need a connection at first to activate the key, similar to the way Steam handles DRM. Thus the Blu-ray disc would no longer be needed, and second-hand sales would be nuked.
So course, everything you see here is speculation and rumor – even the supposed email is unverified. But if the note to employees is real, then customers can breathe a sigh of relief knowing that their new console isn't a box of junk when the Internet goes down.