It will use Bluray.

HD-DVD wasn't supported by Microsoft, it simply used their codecs and I'm guessing the 360 HD-DVD drive was built as they didn't have to pay expensive royalties and the drives were cheaper to manufacture. It may also be that they wouldn't be allowed to use Bluray without having HDCP which wasn't available on the original non HDMI model 360's.

The reason they will have the Bluray drive next gen is the disks are far more resilient, they'll want to further push into the media centre market and finally the faster speed of modern Bluray drives make them a sensible format to choose now.

Makes sense. PS3 beta tested it and now MS will perfect it. Will be nice to steal another Sony exclusive lol

MS needs to pay to SONY for using Blu-ray? Really?

But its rooted in fact. Wii and 360, even PC didnt use Bluray this gen. PS3 bluray had slower reading speeds then DVD, leading up to more mandatory installations.The number of 360 games that requrie multiple disks are a vast minority to its library of single disk games. You could argue that bluray wasnt perfected this gen, nor was it even truly necessary.

The stealing exclusive comment is pure tongue and cheek.

BR or propriety, largely irrelevant anyway.

After all these years BR still trails far behind DVD in shelf space in every store Ive been in. Only bought ~3 BluRay movies since picking up a PS3 in 2008.

I guess many people are are just consuming HD media digitally now.

Microsoft has no patents on bluray technology, they were supporting HD-DVD, you are completely clueless.

I'm sure the royalties for using blu-ray these days is a really small fee. So I'm sure that won't be an issue for MS.

*any* proof for that?

It is not Blu-Ray per se. It is a format developed by Panasonic (who is also one of the founding members of the BD Association, and also good business partner of Nintendo) heavily based on Blu-Ray, with the same technology. If it's not called "Blu-Ray Disc" by name, is because of licensing fees, and maybe because Nintendo does not want to associate it's console with a technology that became mainstream thanks to a Playstation piece of hardware, and therefore, it is very  identified to the Playstation brand.

It was the same with the Wii's discs. They were DVD's, but they were never called by that name because of licensing fees. And the DVD was created by Sony too.

And to answer the original question: Microsoft will put a standard BD drive on their console, with movie playback and everything... Why? Because they can, and because they don't care about brands and etc. They are not as arrogant as Nintendo in that kind of things.