A blu-ray that can read DVD's isn't the issue. Of course a Blu-Ray drive can play DVD's (at least for a majority of drives). The issue would be with the existing Xbox 360's only supporting DVD's. Those old 360's with just DVD drives could not play the Blu-Ray based games/movies, and thus be alienated. They could try an add-on for those left out, but still, that just makes it look bad to force an upgrade on the majority of your users.
I say Blu-Ray is the perfect media for the next generation. That or some other proprietary large file size disc that Microsoft may develop/use.







