I'm guessing this is just the arcade system. But if Sega did launch a new console, they are doing what I've always thought was a great idea. One of the things that shaved a couple bucks off the Wii's price (probably like $20 but still) was the fact that it doesn't play DVD movies (unmodded).
I always thought this was a great idea because everyone already has DVD players. So I figured they should keep this methodology on the new console. HD-DVD would be a great idea (for Sega or Ninty). Also there is HD VMD: http://en.wikipedia.org/wiki/Versatile_Multilayer_Disc. Although, with the problems that Wii has with only double layered discs (and my Wii is pretty noisy when accessing them) I doubt a disc with 20 layers would be the answer. However it would be dirt cheap since it would just be a firmware issue, no additional hardware from standard DVD to play VMD (if i remember correctly).
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