Nelson wrote in his blog that there is No Plans For bringing the Sony Blu-Ray format Onto the Microsoft Xbox 360.

“During an interview yesterday, Steve Ballmer was asked about Blu-Ray and the Xbox 360. I wanted to clear something up. Steve was referring to Blu-Ray accessories for the PC. As we have said in the past, we have no plans to introduce a Blu-Ray drive for the Xbox 360. In fact, the future of home entertainment starts very soon when Xbox 360 becomes the first and only console to offer instant-on 1080p streaming HD movies. With a library of thousands of TV shows and movies to choose from, Xbox 360 owners can instantly watch the movies they want, when they want, in the highest form of high definition.”

1080p HD in an Instant, Worldwide. Starting this fall, a broad selection of movies and TV shows from Zune video on Xbox 360 will be available to start and stream instantly, in the highest video quality at the push of a button. No discs, no downloads, no waiting. Get the selection of a video megastore, the best video clarity available and the convenience of cable, only on Xbox 360.

Instant on 1080p streaming HD movies and TV with 5.1 surround sound—direct to TVs worldwide through its Xbox LIVE social entertainment network.

Source: http://majornelson.com/