According to Kotaku's industry sources, the next console from Microsoft will play Blu-ray discs, catching up with PS3 on the physical media front.
The report also claims the console may not play used games. The anti-used game system could in theory link a copy of a game to a specific Xbox Live account.
It further suggests that the new Xbox will ship with a second generation Kinect sensor featuring an on-board processor that allows it to better detect users' motions, and that Microsoft is considering launching its new hardware with a smaller controller than Xbox 360's.
[ Source: Kotaku ]