I would say that it all depends how popular DD will become by the time of next console. Right now, it would not be wise to go to DD and I would say it will still take several years before it will become viable option. If they would release next console in 2-3 years, then they would most likely would use Blu-ray. It all depends how much Blu-ray would cost and how much benefit does MS get from Blu-ray. If using Blu-ray sounds beneficial for MS then they would certainly use it. They don't think like 360 or PS3 fanboys, for them profits in the long term is most important.
Also to those who say MS wouldn't pay for Sony or that Sony wouldn't allow MS to use Blu-ray... Both CD and DVD have Sony technology so MS is already paying license fees to Sony for using them. They could have chosen propriety optical disc just like Nintendo if they really would have wanted to avoid paying to Sony. In next years license fees and manufacturing costs for Blu-ray are going to be much smaller so it isn't such a big issue then.
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