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Afraid Sony was taking over the living room?
Yes that has traditionally been MS domain.

And with all those people browsing online with their PS2's it's a wonder XBL took off.
They was so scared consoles would take over the living room they worked with sega to get them online and browsing the web.
As for playing movies they decided to charge people to unlock the feature that was built into the machine due to fear.

I'm convinced.

But you can't be upset they wanted to break a monopoly are you?
Unless that monopoly was Sony's