Microsoft announced that the next update for Xbox 360 Preview Program members will allow the use of 2TB hard drives. The update will later move to those not in the Preview Program later this year. Adding to this, they will also no longer reserve space in advance on your hard drive. Microsoft does note that some drives may be incompatible or have performance issues. Spoiler "The next update for Xbox 360 Preview Program members will allow the use of 2TB hard drives to store Xbox 360 data. If you are not part of the Preview program you will get this functionality later this year. In addition we will also no longer reserve space in advance on your hard drive." Note: Some drives may be incompatible or have performance issues. If you already have space reserved for storing Xbox 360 data, you will need to clear the Xbox 360 storage to gain full access to the drive. If you are in the Preview program, please review the list of known issues before formatting your drive.