As many as 1 million modded 360's banned from connecting to live.
Hope you didn't have a hacked or, ahem, modified, Xbox 360 lingering around your place:
Microsoft has kicked them all -- possibly up to a million consoles -- off the Xbox Live service. Why? Because Microsoft hates piracy, and if you're modifying your Xbox, it's so you can play pirated games.
Microsoft's statement was rather blunt: "All consumers should know that piracy is illegal and that modifying their Xbox 360 console to play pirated discs violates the Xbox Live terms of use, will void their warranty, and result in a ban from Xbox Live."
While pirated copies of games are easy to come by on file-sharing sites (often before they are ever released), unmodified Xbox consoles are unable to play these games unless they are modified, a process that requires cracking open the case and fiddling around with its innards. So-called "mod chips" are generally quite inexpensive, usually well under $100 (plus extra for professional installation) -- and likely to be even cheaper now that the ban is in place. No one is sure how Microsoft is detecting hacked consoles, but it appears to be doing a great job of it.
Now comes the fallout. Hundreds of thousands of gamers are up in arms, but they don't have much recourse here. Even opening the case of most consumer electronics products voids your warranty and is a violation of the company's terms of use, and mod chips are strictly against the law, as this poor guy can tell you.
Assuming you're on the straight and narrow, how does this impact you? The immediate upshot is that these hacked Xbox 360s are now flooding the used console market: Ebay alone has over 3,000 used 360s for sale as I write this. Chances are good that, should you buy one, you'll find it's been modified and banned from the Xbox Live service, leaving you able to play single-player games but unable to log in to the Live dashboard, making it impossible to play multiplayer titles, earn achievements, or do any of the other online activities, like watching Netflix streaming videos, that make the Xbox so compelling. Be very careful out there....