"Following a recent update to our system software, we have become aware of an issue that is preventing a very small number of Xbox 360 owners from playing retail game discs," a Microsoft statement reads. "This issue manifests itself a as a unique 'disc unreadable' or 'disc unsupported' error on the screen and is unrelated to our recent public beta (alteration from original Eurogamer statement). We are also able to detect this issue over Xbox Live and are proactively reaching out to customers that may be impacted to replace their console."
We've contacted Microsoft to find out what North American consumers should do if their console is incompatible with the update. European consumers have been told to go to Microsoft's general support page.
Update: Altered text above with new information. Microsoft's official statement can be found after the break.