Well... I don't think it will reproduce Blu Ray discs, but if both Nintendo and Microsoft chose to use optical media, I'm pretty sure that both companies will use a high capacity disc, just like a Blu Ray disc, but with their own tech (just like Nintendo uses 9GB discs, but the discs are not DVD's... the media is called Wii Optical Disc)
But what I really really want is that, at least Nintendo, chose high capacity flash memory or cartridges instead of discs.
Imagine a 25GB memory card... less loading times and no mechanical parts on the console.