While I believe *EVERY* company should do what they can to release bug free software, it's "impossible" to do so.
And you are correct, it does invite those to release games early. But that is not the case for every situation. Example, Halo 2. One of the longest games in development, and delayed numerous times to fix bugs and polish online play. How in the world can you possibly beta test a real life scenario with 80,000 people playing every second, covering a million + matches in a weeks time? That is likely to expose a bug that could not have been noticed in real world beta testing. There are going to be exceptions.
In my opinion, the hard drive is there for saving games, your personal music burned for backgrounds in games, downloading additional maps, dashboard updates and finally patching. While patching should be last resort, I am excited that it is there. Other game consoles are getting buggy games without the ability to have the glitches addressed. Xbox owners have this luxury, and I find it advantageous.
All companies should have more strict QA.....not just for MS, but for PS2 and Nintendo. But it's the Nintendo and PS2 gamers that lose out. Xbox fans have the ability to b!tch and moan until they get a patch...and they see an avenue to do so.
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