Well, Sony did a very smart thing, by making the PS3 the cheapest, most efficient Blu-Ray player on the market, thus hitting two markets at the same time: gamers and movie-watchers, which aren't mutually exclusive. It's ironic really, if you go to any major retailer and look at the prices, you'll see that most standalone Blu-Ray players are about $500-$600, while the cheapest PS3 is only $400, which really leads you to wonder what's going on here. Nevertheless, it seemed to work for Sony, since Blu-Ray is the undisputed winner of the format war.
But a large part of it was HD-DVD's half-hearted defense; Toshiba did not fight tooth and nail to beat back Sony, nor did they pressure Microsoft to help them out. Microsoft's Xbox 360 might've been able to make a difference, but what with Xbox LIVE allowing downloads of HD content, it could be supposed that most Xbox 360 gamers were not interested in HD-DVD the way Sony foisted Blu-Ray on it's PS3 users.
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