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Was blu-ray a mistake? 

 

No.  Now, blu-ray's introduction into the PS3 has nothing to do with increasing PS3 sales imo, or making bigger and better games, but rather to dominate the high def DVD market.  Sony KNOWS that only a small fraction of its owners even watch HD movies, so it isn't helping the PS3 more than hurting it. 

Once Sony kills off HD-DVD once and for all, they will probably just reformulate the PS3 and make an add-on for it like the 360 has to play high def DVDs