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Since the Xbox LIVE forums are down and I haven't seen confirmation elsewhere (the Kotaku network seems to get news pretty quickly and I haven't seen it there), then until I see anything I'm going to assume that this is a rumor.
Still though, the whole having to have it on the internet thing is just complete ********. For the longest time at one point my 360 wasn't on the internet, so how the hell am I gonna get past the DRM **** and alleged digital downloads if it's the same case for the newer console?
If the Xbox 720 is going to have download-only games, then it will be as successful as the PSP Go - which is to say, not very. If Microsoft decides to go with this, then that gives Sony the ability to catch up and Nintendo the ability to get ahead even further.
2 – zsaberslash, GalliumGrant-_- I was just about to say what Quad said, but he ninja'd me. Also, I bought a Go, and I was disappoint. Anyway, I like the idea, but I still feel a major part of society isn't ready for that kind of technology which solely lies on the internet for games. But I will say one thing: That day for internet-only content for systems is coming, and it's only getting closer.
1 – GalliumGrant