No, they looked at a problem and found an utterly despicable way of "solving" it. There is absolutely no technical reason why the terms had to be so anti-consumer. As long as the system has to phone home every time a game is bought or traded, that it enough to keep piracy at the same level it is now. It wasn't design by committee, it was design by greed.
EDIT: Parent has deleted. Originally read:
"This is too bad. These engineers/marketers imagined a world where you don't have to deal with the crappy experience that lost, scratched discs provide, but bent over backwards because a few loudmouths can't imagine a digital future. Sometimes even the customers don't know what they want. These engineers identified a true problem and took a pretty good stab at solving it while juggling a huge number of stakeholders, but marketing's awful communication about this vision for the future puts so much of that work to waste. This is design by the biggest committee."
EDIT: Parent has deleted. Originally read:
"This is too bad. These engineers/marketers imagined a world where you don't have to deal with the crappy experience that lost, scratched discs provide, but bent over backwards because a few loudmouths can't imagine a digital future. Sometimes even the customers don't know what they want. These engineers identified a true problem and took a pretty good stab at solving it while juggling a huge number of stakeholders, but marketing's awful communication about this vision for the future puts so much of that work to waste. This is design by the biggest committee."