I'm presonally more interested in HD DVD. Although we won't know for sure, it's certainly looking to be the better value solution when it comes to $/GB. I only just recently spent $500 on a DVD player, yet here we are with HD DVD players for not much more (and they are probably better too). Whereas all indications are blu-ray may have upwards of a 2x markup. For the average consumer with a 720P TV, what would they choose? faced with paying potentially twice the price (or more?) for a unit that will only differ on content. Early indications (imo) are more quantity for blu-ray, but perhaps more quality for hd-dvd, although of course thats a very subjective judgment
in reguards to games taking up lots of space, I believe microsoft are doing good things in this reguard. The developments with the XNA toolsets, framework, etc, should help this a lot. Their example project, mech commander 2, using xna build showed 40% of the game assetes were actually redundant. On top of this, they are also bringing significant advances in compression. Part of xna is xact, the new replacement for directsound (effectivly). This has native support for XMA files, which are a game-tailored variation of WMA audio files. From memory the 360 has dedicated hardware for decoding these files (well I think it does).
Add to that decent texture compression (simple example is FP10) and I feel running out of space (even on a dvd) is a sign you havn't designed your game very well. Afterall, everything has to be loaded at some point. If you can sacrifice 80% of a files size for 5% of it's quality (if, say, using 150kbps/wma equivalent audio?) then that is a *huge* saving on not only load time but also runtime performance (less time spent managing streaming data), for a difference you'd be hard pressed to hear.
I also wonder what effect the 360's 'unified' memory model will have on this situation when it comes to textures.
The last project I did, which fit on a single CD (because it was just two of us working on it - I did the code) had the following data distribution:
for every 100mb:
28mb audio (.wav)
55mb textures (.png/.dds/.tga)
17mb geometry (compressed binary .x)
Audio was definitly not the strong point of the project (long story, should have had about ~4x more audio at *much* higher quality). So you can easily see that not compressing the audio can have a huge impact on size.
The majority of textures were .png, however the majority of the space went to the uncompressed .tgas (in practise converting these would have halved the required space for textures, easily). The geometry was highly compressed as it was (it's about 4x compression overall).
So with that sort of data, you can make a rough guess that a modern game can easily be 50% audio, 35% textures, and 15% geometry. With proper compression, you can hopfully see that there are massive savings to be made. If you deal with a average 4x compression ratio, that can easily be the difference between needing a 50gb blu-ray disk and a single dvd (and don't even mention load times).
My PC oblivion dvd is 4gb after all.
