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They can both play, but they're only allowed to play for one account.
This can't honestly surprise you, this has been happening for awhile now; there is now no difference between buying an electronic copy which is registered to an account and buying a physical copy with a registration code.
Think about it like this: If I buy the PC version so me and my roommate can both play...why should we be able to play with a single activation code? The difference between your situation and mine is that yours is "little brothers" (It's just kids playing a game, come one!) vs adults (it's just $60, shell out goddamnit!)
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