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^ correct, however if you have a jtag, you can download all the content you can handle and transfer it to the jtag and play away.
LMGTFY
if xbox 'A' buys the content then xbox 'A' can play the content with out being connected to live however if you take the content purchased on 'A' and try to play it on 'B' then you need to be connected to live in order to play the contect