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MikeB said:

@ HappySquirrel

haven't heard of developers who were upset with Microsoft over their choice of DVD as their format ...

Maybe such stories were under reported by the media.

"According to Game Informer, nearly every developer they talked to at X05 expressed difficulties fitting their launch titles onto a single disc." 

Some food for thought: 

Insomniac: 

"If you ever hear someone say “Blu-Ray isn’t needed for this generation,” rest assured they don’t make games for a living. At Insomniac, we were filling up DVDs on the PS2, as were most of the developers in the industry. We compressed the level data, we compressed the mpeg movies, we compressed the audio, and it was still a struggle to get it to fit in 6 gigs. Now we’ve got 16 times as much system RAM, so the level data is 16 times bigger. And the average disc space of games only gets bigger over a console’s lifespan. As games get bigger, more advanced and more complex, they necessarily take up more space. If developers were filling up DVDs last generation, there are clearly going to be some sacrifices made to fit current generation games in the same amount of space"

PS3 vs PS2, just imagine 480p vs 1080p games, better audio, larger more complex games, etc. Really I think the long term advantage of more disc storage is pretty obvious.

 

You hit the nail on the head.  Blu-ray disc (as well as a hard drive in every PS3) will allow developers to create games that are not possible on the XBOX.  It's not where they are today, but they'll be there sooner than most people think.