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Blu-Ray as far as MS is concerned is not a must have because they already have their 1080P streaming technology. Since you can purchase movies or rent them from their service, MS could feel this is enough. Yes, streaming does not compare to blu-Ray but the average consumer doesn't really know or probably even care.

I am sure MS will have a disk format but they could adopt technology like some downloadable games where everything is compressed and when you first play you game it's streamed from the CD to your machine and allows you to play while the rest of the assets are installed. Witch such huge HD, I can easily see this as a solution.