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Rumors persist on Blu-ray drive for XBox 360

The Financial Times is reporting that Sony and Microsoft are discussing the possibility of a built-in Blu-ray drive for a premium version of the XBox 360.

CNET's Gamespot posted a news blurb today on a report that, "Microsoft has entered into talks with Sony to bring Blu-ray to the Xbox 360." The report comes from a Financial Times story that quotes an unnamed "senior executive," who says that Sony and Microsoft "are not simply discussing a successor to the Xbox 360's now discontinued, dirt-cheap external HD DVD drive," but that "there is also the possibility of an internal Blu-ray drive being incorporated into a new, more expensive 'premium' 360 model."

Cocept art for MGS4, which won't fit on a DVD.

At the Consumer Electronics Show in January Xbox group marketing manager Albert Penello alluded to the possibility of a Blu-ray option for the 360. However, Penello wasn't talking today and Microsoft denied that it had made any official move to Blu-ray.

While you could argue that having a built-in Blu-ray drive is now a competitive advantage for the PS3, Sony stands to make millions in licensing fees for the technology if Microsoft adopts it. That possibility presumably trumps the potential edge Blu-ray might give the PS3. As for Microsoft, at a certain point it has to consider going Blu--partially because premium game titles are beginning to push the limits of a DVD's 8.5GB storage capacity. The PS3-exclusive Metal Gear Solid 4, due out in June, apparently fills an entire Blu-ray disc, though it's unclear whether it's a single-layer 25GB disc or 50GB dual-layer disc.

What do you think? Will disc capacity force Microsoft to make the move to Blu-ray--or is it just so that it can say it's game console also plays Blu-ray movies? Let us know by posting in the comments.