October 22, 2009 - It seems Microsoft hasn't given up on adding high-definition disc movie playback to the Xbox 360.

In an interview with Gizmodo, Microsoft CEO Steve Ballmer was asked if we'll ever see a Xbox 360 with a built in Blu-ray disc drive.

"Well I don't know if we need to put Blu-ray in there—you'll be able to get Blu-ray drives as accessories," said Ballmer

"I think the future of movies is on-demand actually, as opposed to via distribution on physical media. So we're just going to keep driving forward and try to make [Xbox 360] the best overall entertainment experience, and not just gaming."

Follow up:

Whoops, looks like this is another case of Steve letting information slip out a little too early. Microsoft quickly tried to cover Ballmer's statement saying, "Our solution for HD quality video on an Xbox 360 is coming this fall with Zune Video and 1080p instant-on HD streaming. As far as our future plans are concerned, we're not ready to comment.
Microsoft previously supported the now extinct HD-DVD format by releasing a drive add-on in November 2006.

Ballmer earlier this year mispoke during a conference in Chicago, saying a 'new' Xbox 360 was coming next year. He would later retract his statement, telling IGN, "I confused the issue with my poorly chosen words. There is no news in my comments," said Ballmer.

Update: Microsoft's Larry "Major Nelson" Hryb cleared up the matter on his blog, saying Ballmer misspoke yet again. "Steve was referring to Blu-Ray accessories for the PC," he wrote. "As we have said in the past, we have no plans to introduce a Blu-Ray drive for the Xbox 360." www.ign.com