To be honest I think they have a big issue with the following:
reliability perception
noise & heat
add-on strategy
to get into living rooms in that manner. A loud, noisy games console is one thing, a loud noisy movie/media player is another. If BR does take off its going to need an external drive handing off it and expensive HDD if you want decent download capacity or have to limit itself to DVD/download crowd.
Personally I don't think the 360 design is that suitable for the role outlined here - I know technically it can do it, but it has a lot of flaws in my opinion in this role. It may get them a foot in the door, but that's it. To be honest PS3 is far better designed in this role (which funnily enough was what all gamers hammered it for early on vs 360).
IF MS aren't careful they're going to actually reinforce Sony message for PS3 as a home media centre.
Try to be reasonable... its easier than you think...
