Did they want HD DVD to fail? Well... maybe. Certainly they wanted BR to fail. Are they backing DD? Certainly seem to be.
Therefore I think they figured that any of the following was an okay result, and were trying to cover multiple options by backing, but somewhat unevenly, HD DVD (I've put them in what I suspect would be their order of preference but it's open to debate):
1 - Both HD formats fail. They have DVD and PS3 is stuck with dead format. They rapidly accelerate (in US initially) their DD plans then expand them to Europe. PS3 ideally 'dies' as no-one will want to buy a console with a useless, and expensive, BR player built into it.
2 - BR fails as format. HD DVD soars. They back it fully via add-on, stick to DVD for games, and slowly grow their DD options. PS3 hopefully 'dies' as above and they quietly plan to ensure HD DVD has shorter life than DVD due to rapid growth of DD (particularly in US) and they get to ramp up DD in line with increasing demand while still supporting the current HD media of choice.
3 - BR wins but its adoption is slowed by as much as a year (in terms of being the sole HD media format), PS3 adoption is also slowed, they quickly ramp up DD and stick to DVD, refusing to put any additional impetus behind BR even though it is the HD media format of choice
In the end they got 3. But can you imagine the price discussion now if PS3 had an arguably useless price overhead due to BR while people want an HD DVD player?
So yeah, I think they're preference was for HD DVD and BR to scrap for an extended period then both collapse just when they were ready to ramp up DD content in US.
But maybe I'm just paranoid.
I'm not wearing a tin foil hat, though.
Try to be reasonable... its easier than you think...
