They so totally will. And it'll have DRM hardwired into it. ;p

Some of this has been possible for a long time. You have been able to remove the HDD from the casing and modify the data as you wished for a long time. Like using modified save games to get gamescore or pirating arcade games. However with USB devices it would ofcourse be much easier. But I don't think they will figure out any new ways to exploit just because it will be easier to transfer the data.

"Microsoft really be that stupid to allow any gamer to freely download Xbox LIVE Arcade games, Indie Games, Games on Demand and DLC content to a USB Memory Device?"

We already DL it to a detachable HDD... which, if you take to a buddy's house who has a 360, you get the sh!tty surprise that NONE OF YOUR DLC CAN BE USED. RB songs, arcade games, add-ons... ALL WORTHLESS!!! All the DRM bu!!$h!t remains on the 360 you DL'd the content to.

I seriously doubt DRM will be DL'd to the USB... wait... "doubt" is too weak a word for the feeling.

@nix: Yes, lets hope and pray that MS dont come up with their official usb stick and make the consumer pay a really unreasonable amount of money.

I'm actually confused by Microsoft's decision.

All DRM DLC is tied to a specific 360. It can't be used on another system without modifications that will associate the file with the unique ID of the new 360.

Microsoft was seeing a rise in these type of issues with third-party storage devices and don't allow them anymore. But, people could still modify the data on a HDD and perform the same action.

Now, Microsoft is going to allow the most widely used external storage device on their systems. Even if it has additional DRM code, it will get hacked as needed so that people can go back to what they were doing before with other third-party storage devices.

well, it is my understanding that the DRM is two fold. Not only is it tied to the console that purchased it but also the gamertag. Now my own personal experience is this. I have two 360's. My original beige as well as an elite. I had purchased many xbla titles and music vids on my original unit before getting the elite.

I had 3 gamertags on my original unit and then when I got my elite I wanted to use that one for myself. I got a 256 MU and moved my GT to that. I can actually take that from unit to unit and sign in as myself and play anything that is downloaded to both. Here is the kicker, any game I purchased on one is also available to the other.

For example, the game zuma or peggle i had purchased on my original is actually fully playable by the two other profiles still on that unit. Those are not gold but silver members and so long as they play on the original unit used for purchase, they can play as well as I can play the same game on my elite. They can't play online but still it is a full game where as if I had the game on a MU and tried to let them play it, it comes up as a demo to them.

So anyway, I generally take my MU to my original and purchase games through that and then take my MU to mine and redownload the game and both units can play the full game. An interesting way of game sharing if you think about it. It lets my wife and kids play on one while I can play on the other.

Now lets remove the MU from the picture and insert a typical USB flash drive. Same concept only now the game can be downloaded straight to the flash drive and played anywhere you plug it into. The game is tied to the user as well as the machine ID but so long as the game resides on something with the GT that purchased it, it works. I don't even need to be online to play games but for vids I have to be. Maybe that is the only caveat to this scenario.