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MS didn't just want HDDVD to fail. They wanted the entire HD media format to fail. MS are really keen on Digital Distribution which would have taken off had BR not won so crushingly a victory.

They wanted to delay and confuse the consumer to the point where HD media completely failed. In supporting Toshiba and financing a sub-99 dollar player, they spent a lot of money.

While it eventually became a waste, MS knew exactly what they were doing, and it wasn't a stupid move, it was one of the smartest moves.