Microsoft have disabled the online co-op mode that is available in the new xbox live demo of Resident Evil 5 or Biohazard in Japan. This is due to people using the trick shown before in this blog in order to download the demo when you don't live in Japan.
As a result of this MS are using some sort of IP recognition to block people from outside of Japan from using the online co-op play.
However all other parts of the demo are functioning so go enjoy your single player fun untill the game gets a release next year.
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