I think the whole military aspect is being blown out of proportion. If you look at the numbers, in the last 12 years only 0.45% of the American population served during the Global War on Terror. That's a miniscule market that Microsoft isn't going to lose much money over.
Secondly, in my honest opinion, as a veteran of both Iraq and Afghanistan, if you're biggest concern while deployed is playing a video game, you should just shut up. You need to realize you're in the military and you have a job to do, and there will be plenty of time to play games when you get back to the states. You should be concerned about doing your job and ensuring you and the Marines, Sailors, Airmen, and Soldiers you deployed with make it home safe.