The right of first sale has always been very frustrating to game developers/publishers. Since in theory a whole line of people can play (and temporarily own) the same physical copy of the game, getting the same, full, "as new" experience, while only one payment ever goes to the publisher. As a game developer myself i can totally see this frustration myself, but can't really argue with a customers right to sell something they have purchased.
To me there are two major issues that cause resale to be a problem.
A. Most games are designed as consumable experiences - maybe they shouldn't be. Once you have have played through, there is a little to make you want to keep the game, other than the occasional tacked-on multiplayer mode, or the geek-centric urge to collect a "library" of games. On slashdot, car-analogies are popular, but from most points of view, a car is not a consumable purchase. When you sell your car, you lose something very tangible: ie. the ability to get around. Once you sell your (completed) game, you pretty much lose nothing - a closer analogy for many games would be a bowl of ice cream. You buy it, you eat it, and then... wait... it reappears, un-eaten, and you can sell it on too? Awesome!
B. Games are too f***ing expensive. Does no one at MS, wondering why used-games are so popular, stop to think $60 is crazy expensive? I'm positive that sales would more than double at $30, just from the increased impulse buys.There are a lot of people who currently just don't buy *any* games because of the cost. In addition used-game margins would plummet, causing retailers to see them less as an easy revenue stream, and consequently push them less.
So in summary. Give consumers a reason to not want to not sell the game they bought. Also give them less incentive to choose a used copy.
ps. another analogy for a consumable experience is obviously a buying a movie ticket. How does this compare with what MS are (maybe) proposing? And why is it different? (I'm honestly asking.) You buy a ticket, you see the latest, greatest, Fast & Furious movie at the local theater. Right of first sale says you can sell your ticket to someone else, but those f**kers at the door ripped your ticket in half! Is this really any different from an activation code?