Opinion: Does Microsoft's modded console ban really stop piracy? Or does it just alienate innocent tinkerers?

Microsoft have caused quite a stir this week, banning over 600,000 Xbox Live users for having modded their consoles. The move is an attempt to deter piracy and cheating in online games, two problems that obviously and validly need addressing. But have the bans hurt users with more innocent intentions for their modifications? Read on to find out.

Piracy in the games industry is no new thing; I can remember way back to weekend car boot sales in the early 1990s where dodgy Del Boy types would be selling knocked off Amiga 500 floppies for peanuts. Sales of software for the original PlayStation were marred by piracy-enabling mod chips, and the Dreamcast too was ridiculously easy to exploit, requiring just a boot-disc to play copied games.

Widespread peer-to-peer piracy is rife too, with illegal downloads being cited as a major contributor to ever declining PC software sales.

Despite the might of Microsoft behind it, the Xbox 360 is no better defended against piracy-enabling mods. Specialist services will modify your Xbox 360 for under £100, allowing a user to download and burn their own software. Though Tech Digest does not condone piracy, it is easy to see how strong the temptation of buying cheap knock-off games or downloading them for free could be, especially with games like Modern Warfare 2 commanding an extortionate £54.99 price tag.

Though the gaming industry is becoming increasingly wealthy, piracy costs companies billions of pounds in revenue. While larger publishers may be able to bear the brunt of such losses, small independent companies literally go hungry without legitimate software sales. It results in companies less prepared to go out on a limb and innovate with new creative games, instead focussing on an established series or intellectual property. Cue boring sequels, dire-movie cash-ins and derivative Halo-clones.

Even giants like EA are looking to cut as many as 1,500 jobs in the new year, which will cause a dozen games in the development stages to be canned indefinitely.

However modding does not necessarily equate to piracy.

Here is where the argument gets interesting. Piracy is bad, no question about it. But banning a console modded to increase hard drive space, when the only official alternative is a measly 120GB drive? That can't be fair, right? Microsoft seem very keen to limit the choices available to users to just Bill Gates branded gear; just look at the recent lock-out of third party memory units.

Also, having shelled out for the inflated price of a game, shouldn't a user be allowed to back up their copy? Discs are still a fairly fragile, scratch prone medium. If something so fragile as a disc breaks, should the consumer really have to buy a brand new game? Sure, there is the increasingly available option of legal digital downloads, but, just like with digital music downloads, I think I speak for many people when I say that I like the ritual of walking into a shop, handing over my money and coming home with something physical in my hand.

Modded consoles also open up the Xbox 360 to the homebrew community, with gangs of bedroom designers the world over teaming up to try their hands at game making. This is often a well of creativity and a great entry point for designers with untapped talent. It's easy to forget that massively popular games like Counter Strike started life as software mods themselves.

But perhaps the homebrew community wouldn't seem so vital to creative design if game companies had the money saved from piracy to invest in it themselves. It's a vicious cycle.

Piracy will never go away, but how we deal with it is important not just in terms of punishing cheats and thieves, but also in how we go about protecting consumer rights and defending those who just like to innocently tinker under the bonnet of their favourite toys.