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He means something you don't expect, but the people at Nintendo have come up with that they hope will have the same instant success as the Wii Remote.

You're focusing too much on technology (which is not, after all, what people want to buy - they buy content) by saying DVD vs. Blu-ray. If DVD is a limiting factor, they will use a higher capacity disc. But it will be only to increase the creative freedom for new games, not as an end in itself. They will probably use a generic version of HD-DVD if they have to, as it is easier to license. By generic I mean the console won't be able to play HD-DVDs or Blu-ray but the physical media will be the same, just like the current Wii Disc being a generic DVD.