"Every Durango console will have a hard drive, although its exact capacity has not been chosen," reads help documentation in the Durango XDK. "It will be large enough, however, to hold a large number of games. All games will be installed on the hard drive. Play from the optical disc will not be supported."
The documentation goes on to state Durango games will be distributed on Blu-ray discs, but the discs are purely used as a means to install data, and will not be read during gameplay. Also of note: the Durango will feature “Always On, Always Connected” online connectivity. Whether Microsoft will use the always-on functionality as a means of DRM is unclear; the documentation only mentions background updates, similar to those announced for the PlayStation 4.
Such a system could spell big trouble for used game retailers like GameStop, and even larger issues for gamers who depend upon the lower cost of second-hand discs.
Head on over to IGN for more details.