Whilst the next Xbox certainly needs a larger and possibly faster media format I personally have never liked Bluray (was always a fan of HD-DVD... but think it should have been called HDVD instead) so I don't know how I personally feel about Bluray being in the next Xbox as it would definately be an improvement but would leave me feeling a bit 'flat'. To a certain degree I think Microsoft feel the same way and have on numerous occasions shunned any attempt to be associated with the format, so they may well be thinking in different directions.
Personally I would love to see USB 3.0, or similiar, as being their physical format of choice... they would then have scaleable capacity and yes it would be more expensive to make but would likely take up considerably less space to ship (depending on choice of packaging), thus allowing more to ship in the same container meaning cheaper transportation. Either way it wouldn't be so expensive as to kill the profit. Plus USB and the like all have faster transfere speeds than nigh on all disc formats. Another plus is their damn near invincibility I have stepped on a few of mine, washed some and even snapped two in half and they all work just as well as when they were new (atleast as far as USB 2.0 is concerned).
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