Microsoft Bans Altered Xbox 360s
Some Xbox 360 owners had a rude awakening yesterday when they signed onto Xbox Live. Anyone who's modded his system (added a bigger hard drive or an illegal chip to allow him to play copied versions of games) received a scary message upon logging onto Live. (The message explains that the modding gamer's console has been banned from the online service.) On a blog written by employees of Microsoft Games' Global Marketing team, the company cites, "creat[ing] a level playing field for all gamers," as the reason behind the new measures.
In the old days of video game console modding, the battles between system manufacturers and modders weren't really battles at all. Every time a new mod chip came out, console makers like Sony and Sega were forced to change their designs, which took a lot of time to do (and then were also inevitably cracked).
These days, with consoles going online and effectively dialing home whenever you boot them up, it's a lot easier for manufacturers to detect these sorts of unapproved system tweaks and shut them down. In this case, Microsoft is running checks looking for any unapproved changes made by users to the Xbox 360. If any are found, the user receives a so-called "Status Code Z" message, indicating that the particular console in question will never be allowed online again. That does not mean the actual user is banned -- only his modded Xbox 360. Thankfully, Microsoft isn't going so far as to ban the Xbox Live accounts of rogue users, since doing so would lose the company the $5 a month those gamers pay for the service.
From CrunchGear
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