Thousands of gamers may have been cut off from Microsoft's online gaming service Xbox Live for modifying their consoles to play pirated games.
Online reports suggest that as many as 600,000 gamers may have been affected.
Microsoft confirmed that it had banned a "small percentage" of the 20 million Xbox Live users worldwide.
BBC website readers have been writing in with their reaction. Here is a selection of their comments.
Is this really an appropriate response, banning all modified consoles? There are legitimate and legal reasons why one might modify their console, such as using homebrew software created by independent developers.
Matt Slater, Clitheroe, England
I bought an Xbox 360 Live from Ebay three months ago. I had no clue it might have been tampered with and it was sold with genuine games, I have since bought new games and played happily - until last night when I was told as I logged in that my console was banned because I'd broken the terms of the agreement. How would I have known if the console had been tampered with? I've started dispute procedures against the seller via Ebay, as far as I'm concerned the console wasn't advertised correctly!
Billy, Sunderland, England
I think that this is a good thing. It makes the gamers that pay feel hard done by because we have obeyed the rules. This stops the cheats having an unfair advantage over others and the ban is deserved.
SAS Jesse, Stoke on Trent
Though I, like most Xbox users have not modified my console, I am concerned that the real reason for this disconnection is not to prevent the use of counterfeit games, but to preserve Microsoft's control of the market, so that it may charge publishers for the right to publish a game. Whilst this may seem fair enough, it does result in only "big hit" games being published, while smaller, often more interesting games, are only available on the PC or the somewhat overpriced Xbox Live arcade. I am concerned that Microsoft cannot satisfy itself with the Xbox live subscription charges, but sadly, the competitors (PS3 and WII) seem to use similar systems.
Rory Yeung, Ipswich, Suffolk
I am not an Xbox player but I get really annoyed that they go on about piracy, I have said many times that the only way to stop it is to bring the price of software down, its the same with Windows, far to expensive and too many versions. Games could be half the price and Microsoft would still make money. Bill Gates must be laughing on board his yacht.
Well copying anything to make a profit is illegal but at the same time I'm tired of paying for a game, CD, movie, and getting a scratch just for the disc to be worthless. I'm already paying $59.99 for a game and I shouldn't have to pay a second time for something I already own because of a scratch or something. Let us copy our own games or at least get a replacement with out having to pay $59.99 again.
I don't even have an Xbox but one of the reasons I don't have one is because Microsoft do this. The modchips do have a legitimate use. You are allowed to back up CDs on your computer in case the CD becomes unplayable. Discs are very fragile things and some users like to have their games backed up. After all you will have paid £40 for a new disc. It is my opinion that once you buy a disc you should be allowed to do whatever you want with the media as long as you do not break copyright laws. Using copied discs to play games you have already paid for is not a violation of copyright, therefore Microsoft have no right to do this.
Donald Glass, Aberdeen
Although I do not condone piracy or own an Xbox, I totally disagree with Microsoft's response here. If I have purchased a product, I would expect to use is as I wished, if it invalidates my guarantee, so be it, but having paid good money for it, it is mine. The "big brother" attitude from large companies and others is not only an attack on our personal freedoms but also very, very frightening.
Michael McIver, Hastings, England
My Xbox 360 console was banned from Xbox Live last night. I purchased Modern Warfare 2 and went to play it but I had my Xbox chipped a month ago to play games that I wasn't prepared to pay £40 plus for. I was stupid and regret it now but I think the fact that so many people have been banned, highlights to the gaming industry that the costs of games is too high. As with music, film and games, the pirates will never go away, but for the majority of us who want to stay on the right side of the fence, the cost of games has to come down as it already has with music and film.
It's important to fight back against piracy, but not at the expense of the consumer. Everyone worth their weight in salt in the games industry knows that piracy is impossible to stop. But so long as it is guarded against responsibly, the publishers will make profit and more great games will keep getting made. As for Xbox banning consoles from Live, this can result in shortcomings for thousands of gamers who have been misunderstood by the team behind the service.