Microsoft has said it will not be developing a Blu-ray add on for the Xbox 360, and will be concentrating exclusively on digital downloads for content distribution.

Until recently Microsoft had been selling HD DVD add-on boxes for the gaming console and after Toshiba threw in the towel on the technology analysts and industry watchers had expected a Blu-ray equivalent.

But in an interview with Reuters Aaron Greenberg, group product manager for Xbox 360, denied there were any plans to do so and said the company was betting on downloads as the way forward in media distribution.

"Xbox is not currently in talks with Sony or the Blu-ray Association to integrate Blu-ray into the Xbox experience," he said.

"We’re the only console offering digital distribution of entertainment content," Greenberg said. He added that Microsoft would be sticking to this model, even for downloading high-definition content.

Overall he expected worse Xbox sales than the competition for February because of lack of stock, but promised that production was now ramping up.

"We definitely expect we will trail in February as a result of our supply constraints," Greenberg said.

"By April, we will be in a very healthy inventory situation."

This will come in time for the release of the eagerly awaited Grand Theft Auto 4 game. Although the game will be available for both the PS3 and the Xbox 360 the version for Microsoft’s console will feature exclusive content.