Microsoft is reiterating the opinion that Sony's Blu-ray will die a slow and painful death and the victorious HD format will never come to the XBOX 360.
Although Sony's Blu-ray format has been a mild success, it has no where near the same adoption rate of DVD and never will in my opinion.
With the increase of needed bandwith required to play streaming movies in good quality and lack of high speed in certain areas of the country, I really kind of see the whole Blu-ray physical format here for a little while longer.