Blu-ray technology out-does DVD for one reason only: the discs store more information, so you can fit a higher-resolution movie file in the same physical space. That's a great thing now everyone and their dog has an HDTV. But a new disc material will allow ridiculous amounts of information--perhaps 20 times as much--to be stored on a disc, holographically.
Until now, the plastic materials available for holographic data storage haven't been particularly capable: when they're fused to form a data "spot" they structurally change, and shrink by around 0.23% when multiple holograms are encoded in a standard 0.5mm-deep disc material. That's a tiny fraction, but it's enough to affect the potential density of spots you can encode, since it changes the optical beahvior of the disc unpredictably.
Storing data holographically requires two light sources, and it works by altering the physical structure of the disc where the two laser beams meet: the transparent material's refractive index is altered. Essentially you raster one laser across the material, and one through its depth, flashing the lasers to fuse the material in specific spots. To recover the data, a different array of lasers illuminates the disc, and reads the variations in refractive index.
In conventional discs like DVDs and Blu-ray disks, data is stored on the disc as a series of spots on a flat plate representing binary numbers--the disc is spun, a laser detects the string of spots, and the device converts the signals from a laser detector into data again. Using the depth of the disc to store 3D spots simply allows more data to be stored.
But Criag Hawker 's team at the University of California in Santa Barbara has replaced the component monomer molecules of the optical plastic used for holographic discs with larger ones that are branched--dendritic macromonomers, specifically. These require fewer chemical bonds to create a "fused spot" under laser-heating, and thus shrink by less than 0.1%. In addition, the material demonstrates good photosensitivity, meaning it reacts sensitively to laser light, which may enable lower power lasers to be used to scan the disk.
And they say that should allow manufacturers to create a system that can store up to 1 terabyte of data in the same sized disc as a Blu-ray one, which can manage about 50 gigabytes. That 20 times storage boost won't be good for storing movies, at least not until Super-HiVision TV  arrives, but more likely as data storage. Because holographic discs offer a significant advantage over conventional optical ones: If you slightly scratch the disc, the data shouldn't be compromised, since information about individual parts of the hologram are stored throughout the optical pattern.
Don't expect this to appear in consumer products rapidly though: It's still very much in the experimental stage. But it looks like optical discs may still be around after Blu-ray goes the way that DVDs are slowly going.