Much like the cleaning of a house, useless tech rumors never end. I would argue that one of the the primary killers of HD-DVD was Microsoft's failure to include it in the 360 Elite. We're coming at a point where the 8.54gb available on DVD is starting to get too small for modern games. For PC gamers, that's not a big deal but for console gamers, you don't want more than one disc. A multi-disc RPG for the 360 has or is going to be released. The exact info escapes me right now. Recently, it was announced that Metal Gear Solid 4 would not fit on a single layer Blu-ray disc, forcing them to use the larger 50gb dual layer BD discs for the PS3 version. Obviously the game is really huge or Kojima Productions doesn't know how to use compression. If MGS4 were to be on the 360, it would require at least 3 DVDs and at most 6.

Now there are rumors that Microsoft is working with Sony to include Blu-ray technology in the 360 somehow. Likely in an external USB drive like with the HD-DVD add on. I'm a little skeptical of this. First off, it's well known that Microsoft is pushing for digital downloads. Secondly, though Microsoft is a huge company, it's not like Sony is the little guy. The PS3's BD capability is probably it's biggest saving grace, or at least the one consumers notice. I almost wonder it the 360 will end up like the Sega Genesis did in it's later years. Remember the Sega CD? It would seem to make sense for Microsoft to add a BD drive to the 360 but little of what actually goes on in the entertainment industry makes sense. It seemed to make sense for Sega to add an external CD drive to the Genesis and we all know how that worked out. Will people pay extra for a separate add on or just buy the competitor who features the same drive internally. We're at a bit of a weird cross roads right now where console gaming is starting to cross into the PC realm. The ultimate question for Microsoft is whether console gamers will put up with multi-disc games like their PC counterparts do. Microsoft did say they support Blu-ray now that it's won but how exactly they didn't mention. We'll just have to wait and see.

Source: Crave
Daily Tech

Update March 15: If you couldn't see this coming, you may need glasses. Microsoft denies Blu-ray for Xbox 360.