Microsoft seems to finally be joining the dark side and creating a Blu-Ray player for their Xbox 360, as Gizmondo reports in an exclusive interview with the CEO of Microsoft, Steve Ballmer. This is very odd considering that ever since the format war ended over a year ago there have been several bouts of rumors that Blu-Ray was coming to the Xbox 360, but all of them were denied.

The Blu-Ray drive would be similar to the HD-DVD drive that was available originally prior to the brand becoming extinct. It will plug into the USB Drive on the Xbox 360. Before you know it, you could be rocking a Blu-Ray version of Star Trek on your Xbox 360!

However, Gizmondo also mentioned that Steve Ballmer could just be stating that if Microsoft were to make a Blu-Ray drive it would have to be external, but it certainly didn’t sound that way. Steve Ballmer also said that Microsoft feels that digital downloads are the future and will be primarily focusing on HD downloads starting with the latest Xbox Live Update. This update will be bringing in a Zune Store full of HD TV shows and movies.

“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.”

UPDATE: Well it would appear Microsoft is trying to cover it’s tracks after Steve Ballmer’s statements. Larry “Major Nelson” Hryb has posted a piece on his blog regarding Ballmer’s statement.

MJ Nelson also mentioned that the Blu-Ray drive Mr.Ballmer was referring to was for the PC and not Xbox 360. Mr.Ballmer, your a god of mass confusion!

“As we have said in the past, we have no plans to introduce a Blu-Ray drive for the Xbox 360.”

Do you think this is Microsoft trying to cover their tracks? What do you think of Blu-Ray on the Xbox 360? Do you believe digital downloads are the future?