If MS wants people to get used to digital distribution, instead of just cramming it down peoples throats by making physical media like it, they should have sales like Steam does. If Steam can have sales on AAA titles the week they come out then MS can also, they're bigger, no more of this crap where the downloaded game cost more than buying the disc new at Walmart. They just went about it all wrong. . .

One word: GOOD.

People-Power! So where does this leave the revamped XBox 360, buy a new machine to play your old games? That was a big waste of development dollars wasn't it MS you control freaks

Congrats on not being stupid.. Wait.. How do they get good pr for being bad then being average? I say shame on them for ever being so stupid. I still have not bought StarCraft 2 because of the net connection requirement.

My Son a 33 year old gamer, just snickered and said no way, He laughed at the ad for it.

I pre-ordered a PS4 already. I think a lot of people voted with their wallets already and I heard speculation that the PS4 was outselling the XB1 by about 2 to 1 which is probably the main reason for the change of heart.
If you think about it Microsoft has the Windows/Office cash cow and they have thrown a lot of money on a lot of failures trying to expand outside that market before succeeding on Xbox. All they really needed to do was update hardware to 2013 specs and not much else and they messed it up badly. The timing of the PRISM leaks right before they announced a console that requires and runs Kinect even when its off and requires an always on connection didn't help their cause much but I can't imagine some of their investors were happy about their attempt to seize failure from the jaws of success.

@ exodous - they already have sales on Xbox Live marketplace; right now Fable 3 is available for free, while games like Halo Reach and Battlefield Bad Company 2 are available for less than $30 AUD.

Its idiots in management like Don Mattrick that make stupid decisions based on the bottom line rather than thinking about the consumers first. Microsoft is always backtracking after stunts from management like this.

I think Microsoft did redeem themselves a tiny bit with this announcement. But, I am still not forking over that much money on their system. What am I going to do with a Kinect since my space is limited. Drop your price tag to be competitive with Sony which I am going to buy and you may sway me to buy an xbox one. $500 seems a tad bit steep to me. Heck even $400 seems a bit steep for me since I am on a fixed budget. but I'm going to save up. Yeah I might not get it when it first comes out but I don't like getting systems when they first come out anyway since there are almost always bugs in the programing or hardware at first. I didn't get the xbox360 when It first came out back in 2005 I waited 4 years when I could afford it. yes I am an avid xbox fan but I still do like what Sony is doing for there system.

Good for Microsoft to backtrack but this is not some naive company that forgot to do market research on DRM.
They thought they'd get away with it and they were quite happy to force DRM town their customers throat.
Basically, Microsoft showed that it is quite happy to eat it's customers for an extra dollar if it can get away with it.
If they didn't get their arcane DRM past you now, they will next time. Reason enough to stay away from Xbox.