Part of what made the PlayStation 3 so expensive at launch, was due to it using Blu-ray disc as a game format, and doubling as a Blu-ray player. Price wasn't the only risk, because back then Blu-ray was battling HD-DVD in the format wars. A few years later, we're seeing developers take advantage of the spacious capacity of Blu-ray, whereas the Xbox 360's DVD9 format forces larger games to fill multiple discs.
This is why Nintendo is opting for a "high-density proprietary optical disc" that's similar to Blu-ray in storage capacity. But despite going for more storage capacity, they decided to skip on Blu-ray format as a whole, and the Wii U won't offer Blu-ray or DVD playback.
The Wii doesn't allow for DVD playback, which was odd considering the Xbox 360 does, and the PS3 allows for Blu-ray and DVD playback. Something that many were sure would be remedied with the Wii U. If you're wondering why Nintendo is skipping out, here's why:
The reason for that is that we feel that enough people already have devices that are capable of playing DVDs and Blu-ray, such that it didn't warrant the cost involved to build that functionality into the Wii U console because of the patents related to those technologies.
At least that's what Nintendo head honcho, Satoru Iwata, told investors following E3. However, it will allow for Netflix instant-streaming. That's definitely something Nintendo couldn't leave out. The Wii does it, and console streaming of Netflix accounts for over 20% of total internet bandwidth.