A Microsoft employee run blog issued a statement saying that Microsoft is discontinuing the Xbox 360 HD DVD player.

This comes as no surprise after Sony's Blu-ray format won last week. Microsoft could get a bit more official on this topic, as they have a responsibility towards their customers who paid $200 for the now worthless HD DVD drive.
In the statement there is no word about Blu-ray plans, only that Microsoft continues to give consumers the choice to enjoy digital distribution of high definition movies and TV shows directly to their living room. We will see if the Xbox 360 is just a Halo 3 gaming device or if Microsoft can catch up to Sony's PS3 again in the living room media hub discipline.
More details on Gamerscore Blog. Via Gizmodo.