The other issue is these drives are already heavily mass produced today. The factories are built. They're good to go. They're more likely to bend on price issues on a drive like that than something that has to be designed from scratch or is a more rare type of order.
I'm sure Nintendo shopped around a while too before deciding the GameCube and Wii formats and found basically that a DVD-based format was the cheapest and best bang for the buck.
Beyond that, there's nothing wrong with Blu-Ray as a format choice at all. It would be a great choice, no-nonsense choice for Nintendo.
In about two years I think it'll actually probably be pretty difficult to get a DVD-only player ... they'll likely all be Blu-Ray players and if you're just looking for the DVD functionality, well it obviously does that too. Just like today it's virtually impossible to walk into a Best Buy or any major retailer and find them selling SD-only TVs, you're buying a flat screen HDTV set if you need a new TV, whether you want it or not. CD drives on computers are all DVD now, soon it'll be Blu-Ray too.
