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Microsoft has made a dramatic U-turn over its decision to impose restrictions on pre-owned titles on its new Xbox One console.

The company had said it would restrict the free trade of pre-owned games, and that an internet connection was required to play all titles.

But following gamers' anger, Microsoft said it would drop the policies.

Microsoft interactive president Don Mattrick said the company had "heard loud and clear" from its customers.

"You told us how much you loved the flexibility you have today with games delivered on disc," Mr Mattrick said in .

"The ability to lend, share, and resell these games at your discretion is of incredible importance to you. Also important to you is the freedom to play offline, for any length of time, anywhere in the world."

The statement, which was for some time inaccessible due to heavy traffic, went on to backtrack fully on the controversial aspects of their DRM - digital rights management - plans:

The rules apply to games bought as physical discs only, and do not affect games downloaded via the online Xbox store.

"While we believe that the majority of people will play games online and access the cloud for both games and entertainment, we will give consumers the choice of both physical and digital content," Mr Mattrick said.

"We have listened and we have heard loud and clear from your feedback that you want the best of both worlds."

However, there will be something of a trade-off for gamers.

Microsoft had planned to allow customers to "trade" downloaded games online in exchange for money off new titles. The change of stance means that gamers will no longer be able to do this - something gamers may regret in the future, one analyst suggested.

"It could be a case of 'you asked for too much, and you got what you asked for'," said Brian Blau from Gartner.

"But I think it's a good thing if Microsoft are listening to their potential customers and responding to them. The fact they have this technology means they can always bring it back at a future point in time."

Questions over the handling of pre-owned games was an unexpected talking point at last week's E3 conference - the largest games industry event in the calendar.

Sony took the opportunity during its press conference to make a direct attack on Microsoft's policy.

"PS4 will not impose any new restrictions on your use of PS4 game discs," said Jack Tretton, boss of Sony Computer Entertainment America, drawing cheers from some attendees.

For Microsoft, it means a second high-profile U-turn in short succession. Last month, it told Windows 8 users that it would be bringing back the iconic "Start" button to its operating system, having previously dropped it from its redesign.

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