Denial of service attacks could have Xbox 720 in its sights and take it offline one day, resulting in a gimped console experience for however long it would take Microsoft to repair its system.
During any such downtime, it could lead Xbox 720 looking to another console...
5. PS4 won't have it
The internet is littered with comments about Xbox 360 owners willing to jump ship and pick up a PS4 if Microsoft does indeed launch with an online-dependent Xbox 720.
"@Xbox always online xbox 720 wouldn't allow me to bring my console to my cabin. Thanks for making a lifelong xbox owner into a ps4 owner," tweeted N1ch01s to the official Xbox Twitter account.
Ultima_Fate also spelled out his next console fate on the social network, tweeting, "I love Microsoft and xbox, that being said, you go online all the time with the 720 I'm buying the ps4 #thinkhard"
The backlash, even if the online-only requirement doesn't include games, could make loyal Xbox owners give PS4 a second look.
Yes, Sony is often criticized for taking forever to match what Microsoft has already implemented, whether it's adding game achievements or accessing its online store through the web.
However, an always-online console requirement is one Xbox-only feature in which no Sony fan will be complaining about if the rumors turn out to be true.
The best approach
Everyone gets it. Piracy is a never-ending battle, and losing money to the GameStop bargain bin is a bummer.
But there's a middle ground between open access and stringent DRM. I'd rather have heard the rumor that Xbox 720 checks to see if content is genuine during a reasonable 30-day period, not every three minutes.
Of course, now that Xbox 720 has been tagged with multiple reports of an always-online requirement, including one from its own employee, Microsoft should set the record straight.
It cannot wait until the expected May Xbox 720 launch event.
There are too many side-effects to always-online: having terrible ISPs due to unchecked monopolies, relying on publisher's undependable game servers, and the threat of hacking incidents.
None of these are good for consumers and, in the long run, will only hurt Microsoft's bottom line.