Sources speaking to Kotaku are saying that the next Xbox will require an Internet connection when launching games or apps on the console. It's similar to systems in place on the PC where games that use Steam or Uplay require an Internet connection to launch.
What's more worrisome is that the next Xbox will reportedly require an always online Internet connection for the most part. It will be able to handle a dropped connection, but Kotaku's sources are saying that the next Xbox can only handle a dropped connection for up to three minutes. A prolonged outage, which is a scenario any U.S. ISP subscriber is familiar with, will suspend the game and open a "network troubleshooter."
Going back to PC games, we've seen systems like this implemented in games like Diablo III and, more recently, SimCity. The latter was especially disastrous as the game's always online requirement prevented many people from being able to play the game they just spent $60 on.
If this is true, Microsoft is making a massive gamble on the next generation of game consoles. For one, the company is assuming that every consumer, or at least those interested in the next Xbox, has a broadband Internet connection. Secondly, it has convince consumers that its always online requirement won't meet the same fate of its PC predecessors.
Outside of those two areas, the always online requirement could also tie into previous rumors that the next Xbox would use online authentication to prevent used games from playing on a machine. It certainly wouldn't be surprising if Microsoft took this path as publishers have been trying to eliminate the second-hand market for some time now.
The most interesting part about all of this, however, is that Sony has already confirmed that the PlayStation 4 won't require an Internet connection to play games. If Microsoft does go down this route, Sony has an opening to lambast Microsoft for being anti-consumer.
It's important to note that all of this is still merely rumor and speculation for now. Microsoft could reveal a console with no online requirements at the event that's rumored to take place at the end of this month. That being said, the next generation of consoles is going to get really interesting if always online DRM and other methods of combating piracy becomes mainstream.