It's not as small of a population as you think. Many people live in rural areas. Many people travel outside of the country for work. It would have only worked in 20 some countries in the first place since it was region locked, so you're excluding entire nations here. Everyone would be effected by Microsoft's servers going down. Like they are right now.
Show me the users affected by this aren't as small as I think it is and you have legs on this argument. Otherwise, I'm more inclined to believe MS did some homework on it, identified how many people they would truly not be able to make money off of, and still went through with the policy. It got reversed because of the perception, not the reality. So dead issue to me.
I already mentioned a specific example that happened to me personally on how DRM screws people over. It screws people over because of connection problems, faulty bans, and the possibility of hacked accounts. Someone could hack into your account and do something that gets you permanently banned. Goodbye entire library of games.
Doesn't affect me because I have a good connection. Apparently, so does everyone else since they are all online and playing together. I have been banned and kicked more than a couple times for invalid reasons. I've called up support and got reinstated right away. Is it a hassle? Sure, but I see it as necessary to keep the cheats and hacker to a minimum. If you've played game such as COD where they don't enforce it that much vs a game where they do, you'd see it's worth the hassle too. The only people who need to worry about it are the pirates and people who circumvent the policies. So, again, I see this as paranoia vs reality.