If they had put a Blu-ray in the new Xbox 360 S it would have killed new PS3 sales. Other than God of War and a few others, I doubt anyone would bother with the PS3. (Not to knock it, it's a fine, and innovative system, but Blu-ray is one of Sony's big advantages.) Granted that the Xbox has been selling so well this year without a Blu-ray player. If it had a Blu-ray it would be even more impressive.
I really like my Blu-ray player. But with HD streaming, I don't need or use it much. Only for the rare movie that I think really needs it and deservest the best quality. Plus, I don't understand why they never put the HD DVD in the Xbox in the first place.
With Netflix 1080P streaming soon (at @ 10MB/s) there really isn't much of a need for a Blu-ray anymore. (Also Zune HD at 1080P with 5.1 surround) I would give my Blu-ray Player to my beautiful sister. It would make her happy, but as most things she watches are streaming now, I doubt it would get much use.
I think more things will just use online connectivity in the future. With 17 mb/s common on fiber optic quality can only get better as conectivity switches to 'the cloud.'







