It looks like the long-running rumor that Microsoft's next-gen Xbox would require an always on internet connection has finally been put to rest thanks to a leaked internal Microsoft memo which has dismissed the 'always-on' mandate.
The email, leaked by Ars Technica, was reportedly sent to all full-time employees working on the next Xbox:
"Durango is designed to deliver the future of entertainment while engineered to be tolerant of today's Internet. 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."
Of note is that the email also confirms that the upcoming Xbox will feature a Blu-ray disc drive and be able to double up as a cable set-top box.
Source: Ars Technica