HD-DVD need only be used for games. BR would still be there for movies. The advantage of HD-DVD is it has already been done. There are little to no R&D costs and few PC based drives that can even read, let alone write it so piracy 'should' be even harder than BR alone.

If it doesn't use bluray, then expect all games to be downloaded.
If neither, then it is doa as dvds simply can't store nest gen games on them.

I don't really see them using anything else than blu-ray.
Drives are plentiful with so many suppliers it would be cheap. Microsoft can negotiate with the suppliers for better prices.
Which manufacturers still makes HD-DvDs?
If they make their own format its gonna be expensive.

Computers seem to do fine without blu ray, I am sure the next box can too.

Not at all because they work very differently.

Computers instal the data rather than running it off the disc, thus compression can be huge, and you only need the engine on one disc, not all of them.  Also a lot of PC exlcusive titles are starting to take up vast amounts of memory eg. Napolean TW is ~25GB in size.

Consoles can't do this as they need the engine on every disc, so if you had a game which was 17GB of data, this would not be on two discs, but most likely 3 or 4 as the engine and vast amounts of data would have to be compied onto each disc.

So as I said, if not major cloud support or bluray, it's doa/not next gen.

Or they could simple have a proprietary format like the Wii U which isn't bluray and can hold 25 GB (which is probably enough for next gen games, with some very few exceptions that may require 2 CDs).

I don't think they will do that.
BluRay is a musthave for NextGen consoles.We enter a NATIVE 1080p Generation.
Upscaling from 576p isn't really a good way to go and Microsoft won't do that and 3rd Party won't support that.
DvD wouldn't be able to hold the amount of data for NATIVE 1080p Retail Games.

they can install games just like a pc, or come on multiple discs. Game consoles and pcs are not very different at all, and next gen will be even similar. Current gen consoles can already install games with no need to run off of a disc.

They could, but this will only drive up costs and piss off publishers. 

Oh, and don't count on 25GB being enough. I guarantee that by the end of this generation we will see full dual layer blurays being used, just remember "why go to dvds? We'll never fill one of them!".

yea i can see it not excepting bul-ray. proprietary software, or sticking with DVD.