Well BluRay space on shelves in Best Buy and FutureShop where I live is expanding not diminishing. When I visit the states their is tons of room set aside for BluRays on their shelves as well. Maybe BluRay is suffering in other regions but in North America it is thriving.

As for should it be included in the Nex-Box, I think it should. Microsoft wants the X-Box to become the main entertainment system in the house. Sure all these digital distribution guys can argue that digital distribution will put them their. But lets face it while DD sales are high BluRay and DVD sales are still higher. The average consumer right now still wants a physical copy and even in the case that the average consumer doesn't their will still be a ton of consumers who do.

Lets put it this way, if Nex-Box has BluRay then I'm selling my PS3, I'll be a two console guy (Assuming I buy Nex-Box). I only own a PS3 for BluRay and LBP give me BluRay on Nex-Box and bye bye Sony. Also as others have said if PS4 has BluRay all the BluRay consumers will upgrade to PS4 rather then buy a Nex-Box. If Microsoft includes BluRay they will cut into PS4's market share big time.

Also disk capacity, if Microsoft doesn't have its own disc format like Nintendo. Then they need BluRay's that carry 50-gig. Lets face it DVD's won't suffice anymore a bigger capacity format is needed.

In the end I think Microsoft could benefit big time from BluRay, I also think a BluRay format or similiar in house developed Microsoft format is needed for Nex-Box to even compete. So BluRay would probably be the cheaper and more advantaged route. Then again Microsoft is a sore loser and they lost with HD-DVD would they admit defeate and use BluRay after how much they fought against it? Only time will tell!

Blu-ray, or a similar high-capacity disc if Blu-ray is replaced, is almost essential for Microsoft next generation.

Games are only going to get bigger and bigger. Some games have already strained the 4.7GB DVD limit and have had to be on multiple discs. As kowenicki said, Blu-ray players are cheap, and blu-ray drives are cheap as well. It would be a very, very small cost tacked on to the system production cost, and in any case, ALL discs are cheap. The difference between the price of Blu-ray and DVD films is because the studios take more money for Blu-ray films. That's why PS3 games don't cost more than 360 games.

Digital distribution is brilliant, yes, from the point of view of somebody with high-speed fibre-optic internet. In most of the world, access to high-speed internet is limited, and even in parts of the USA, broadband is unavailable. Until high-speed internet is universal, physical media isn't going anywhere.

Microsoft markets the xbox as both a gaming and entertaining/multimedia device and adding a blueray would benefit both uses.

For the gaming side they will benefit from the extra space a blueray disc has over the DVD, and would put them on par with the capacities of the PS3/4 and WiiU discs.

As an entertaining/multimedia device they will benefit from the ability to play both DVD and Blueray films.

And for those who talk about Netflix, remember that it only operates in the USA and Canada while you can buy blueray movies everywhere.

That is a ridiculous statement. 

The Xbox 360 doesn't have an internet browser, its apps are very limited, its music player is mediocre, its photo and video viewing facilities are again mediocre, it can't play HD films on the most popular media, heck it doesn't even have an Optical Cable Slot on it so you can't use it effectively for surround sound. 

The Xbox 360 is a games machine. You can tell that as soon as you boot it up and see the interface. 

No it wouldn't be cheaper. The consumer would lose out. Sony would be paroyalties from MS ontop. the games would be more expensive. Nintendo opted to open new factories for a 1 of a kind disc for Wii u. I'm hoping MS will do the same. I don't fancy paying extra for my games because of bluray royalties.

Um Zune music player is amazing. For 1 cost I have unlimited music downloads across 360, pc and my WP7. Are you sure you know how much acess to media I have compared to my ps3 friend. And it costs me less a month for all of it than she spends and she gets much less. Also the ps3 browser is horrible. And you can't access half the web. My phone can do more with internet. No browser needed on console unless its a proper browser. The apps are console specific. As in they work with a controller. That's the point. MS understand an analog stick is useless for surfing the web.  And MS done away with optical on new design because of HDMI. If I were u id plug ur HDMI cable into your amp. Its much better quality than optical. Any decent amp has a HDMI tv out. So u get perfect sound and perfect picture. This is 2011 not 2006.

I don't think he head internet in mind when he said multimedia.

It's music player is actually fine, be it in the dashboard or of course Media Centre.  It can view videos and photos as well as it's competition.

It doesn't have Bluray, hooray you made a valid point at last (although it's downloadable content is far superior)....Then ruin it by not getting the fact that the 360 optical output is part of the AV socket and hence you have optical output through there, unless you have a slim in which case it's even onboard!

Had you really wanted to state your case you'd have been better off just attacking the Bluray aspect along with the 7.1 HD audio capabilities of the PS3, instead you just sound whiny and desperate.

Cost is irrelevant. 

The PS3 has Netflix, Music Unlimited by Qriocity, Lovefilm and all those media options as well. On top of that, it offers a much better photo/video suite, an internet browser (for example it's much better to go on facebook on PS3 than to use the 360 app), Blu-Ray and DD HD films, and it is twice as good for audiophiles.

Anyway, the vast majority agree with me so I'm not going to argue with you.  This is night and day.

OT: I think DD is the future, and I hope it becomes more popular with the next gen consoles.

Netflix. Lolololol.

Zune marketplace m8. 1080P download or streams. Often films are available on there before the bluray comes out in mu country.

I would never use Netflix over Zune marketplace. MS have done a much better job of the HD films on Zune.

• The internet has a ton of multimedia. You can't ignore it when you are talking about multimedia. 
• It's music player is not as good as that on the PS3. If you are an audiophile/enthusiast, you'l know this. Sure, the 360's player is solid and functional, but it is not as good.
• Video/photo options are again solid, but not as good.
• Blu-Ray is kind of a big issue here
• When I had a 360 there was no optical socket when using an HD cable. Or maybe I just couldn't find it.