According to an internal Microsoft e-mail sent to all full-time employees working on the next Xbox, "Durango [the codename for the next Xbox] is designed to deliver the future of entertainment while engineered to be tolerant of today's Internet." It continues, "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."
The quotation also implicitly confirms another rumor: the next Xbox will sport an HDMI input, to allow cable boxes to be hooked up for live TV viewing. Our sources tell us that the console will be able to provide TV listings and similar information.