Blu-ray still has legs on it with the multiple layers (400gb is current limit with 1TB coming in 2012-2014), everything after the Wii U will use Bluray probably, and maybe even the generation after that unless public want for physical media changes. There's no need for another VHS vs Betamax or Bluray vs HD DVD.
Just look at Sony with the UMD or the MiniDisc, they did not take off because there was not wide adoption. For UMD it was the only choice for PSP till PSN came up with the good (and it's still not up to UMD yet) the movies failed as only PSP's could play them, there were no other stand alone players, and people werent that bothered to watch a move on the go, they had games for on the go. Maybe if they had video output in the original PSP people could of used it like a portable DVD player, but they didn't. The MiniDisc failed because it was in a big market for music on a portable player, you could get music in multiple formats if it was largely just for Sony then why would somewhere stock it? Go for the option that is more widely supported.
It would be dumb for Microsoft to make their own format, yes it would protect them if they closed it off like UMD and probably be more secure, but why not just use Blu-ray, and established format and let your console play the Hidef movies people have been building collections of for years already? Yes you could have a dual player but whats the point? its cheaper to just do Bluray, it has more than enough capacity for probably the next 2 decades.