Microsoft has responded to reports that a new dashboard update was causing some older Xbox 360 systems to have a "disc-read error." The company said that the error was actually being caused by disc-reading algorithms, and not defects in Xbox 360 hardware.
The error “is tied to a change in the disc-reading algorithms in a recent software update,” a company spokesperson tells Develop. “It is not specific to older or newer versions of Xbox 360.”
The new firmware offers new anti-piracy measures and 1GB more space for disc-based content. Microsoft says that a "small number” of machines are not compatible with this firmware. In those cases, Microsoft is replacing those consoles with new ones.
Affected users will receive a new Xbox 360S and 12 months of Xbox Live Gold for free, the company said.
Meanwhile, Gamasutra reports that this new firmware is being released today via Xbox Live. Besides the new anti-piracy technology (which some claim can detect when users load a pirated disc into their system when connected to Xbox Live) and the new disc-format support, the update adds the ability to use PayPal for digital transactions.