Microsoft's next-generation Xbox, codenamed Durango, will not require an always-online internet connection and will work in tandem with a new Xbox 360 add-on for backwards compatibility.

That's according to VGLeaks, citing a source as saying that the console will have always-online functionality, but the lack of connection will not prevent users from playing local content, and it will also not prevent the use of second-hand games.
This comes in direct contrast to previous controversial rumours which have suggested all content on the new console will be locked without a live connection to the internet.

VGLeaks reports that those rumours are actually likely linked to the new 'reoriented' Xbox 360, which it says will be a small device pitched as a cheap - around $149 or lower - set-top media box with added 360 and XBLA game support to compete with Apple TV.

Interestingly, the report claims this new Xbox 360 "is likely to not" have its own disc drive, and all content will need to be downloaded digitally. However, connecting it directly with Durango will allow users to play disc-based Xbox 360 games on their Durango console with the help of the add-on Xbox.

"Putting in an Xbox 360 disc into Durango will prompt the user to attach the supporting device that is sold separately. By separating the two devices and their functions it will ensure price competitiveness for both pieces of hardware," says the report.

Multiple recent reports have claimed that Microsoft's original plan to unveil its next console at the end of April - as first reported by CVG - has been shifted to an event in May.

VGLeaks corroborates, saying the delay was due to Microsoft "not having a physical set of devices to show" and "specification changes".