The Xbox One will not require a regular Internet connection.
Gamers will continue to be able to use, trade, sell or loan their games just as they have been on earlier versions.
Those announcements, made Wednesday, represent a reversal for Microsoft on two key decisions about its upcoming Xbox One console that had infuriated many gamers.
"Since unveiling our plans for Xbox One, my team and I have heard directly from many of you, read your comments and listened to your feedback," Don Mattrick, Microsoft's Interactive Entertainment president, wrote about the change.
"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," he wrote. "We have listened and we have heard loud and clear from your feedback that you want the best of both worlds."
Earlier this month, Microsoft had said Xbox One, which is to hit store shelves in November for $500, would require an online connection with the company's servers once every 24 hours.
Users could still play games on their primary console offline, but for only 24 hours maximum.
The offline maximum would be even less for those playing on a separate console accessing the games on their own library: only one hour.
That policy was put into place to make sure the system, apps and games are constantly updated and, presumably, to prevent piracy.
Microsoft also had placed restrictions on how used games could be given, shared or resold -- including that each copy of a game could only be given once.
After a flood of criticism, the company did a 180, saying that, after the initial Xbox One setup, those playing disc-based games would not need an Internet connection.
Those who play downloaded games will also be able to play them offline without having to check in every 24 hours.
The company also said that buyers of games on discs can continue to share, give, rent, resell or trade in discs just as they do now. (Playing such games will require the disc be in the tray.)
Those who download games from Xbox Live, though, will not be able to share or resell them.
One reason Microsoft had initially required the regular online connectivity was "we've been focused with Xbox One on how to take advantage of new capabilities and, frankly, to build for the future," Marc Whitten, chief product officer for Xbox, said in an interview after Mattrick's posting.
The Xbox team had been excited about what digital and cloud power meant for changes to gaming and entertainment, Whitten said, and "it was something we really wanted to build a platform around.
"What we've been building toward is telling this story of where the future is going," he said.
"What we heard back is that while people like a lot of these scenarios, they need the flexibility" to be able to play offline and to be able to share, trade or sell their discs as they will.