A relatively cheap PS3 Slim is inbound. Let's talk Microsoft's response.

[WereKitten]

Squilliam said:

WereKitten said:

^ I take you're talking about persona (b) i.e. someone who is considering to buy a console. Thus he's either familiar himself with using a controller or can buy a pretty Sony remote for $20. I don't think he'll sweat it, as he'll also have to buy cables and other accessories whatever console he chooses.
As for Netflix: zero value outside USA. And while Sony can add video rental and subscription services too (I think they announced some today for several european countries), the 360 is not getting BD. Which incidentally becomes the more attractive the lower the cost of the movies drop, and the more diffuse HDTVs become.
Anecdote: I noticed yesterday that my local Mediaworld store has almost doubled the shelf space for Blu-ray movies (I'd say it's now about 15% of that of DVDs) and is selling a good number of them at 15-19 euros, which places them in the same bracket as newish DVDs in the same store.

Yep persona B. However I consider persona A to be irrelevant when talking about consoles, the idea that a lot of people buy a PS3 solely for Blu Ray at this point has been debunked.

The attraction of BR relies on whether or not the person has or has not bought an HDTV and whether or not they have or have not bought a Blu Ray player already. Its really hard to say at this point what the market dynamic is because its a complicated issue with no easy answers.

Btw: The Xbox 360 has on demand services with Sky in the U.K and someone else in France as well. So you could say their on demand service covers ~55% of the worldwide gaming market at this point with regards to Netflix or similar.

Persona (a) was named exactly because he's not only interested in Blu-ray, he's the one who can be moved into adding $100 to get also get media-hub/console capabilites. Both (a) and (b) were born as more common people than (a') - the misanthropic, cheap movie buff - and (b') - the h4rdc0r3 gamer.

I can't find many data about the number of Blu-ray players sold WW, but for US I've got 10.7M at Jan 2009, of which 7.5M were PS3, leaving 3.2M devices. That amounts to what, about 5% of households? I'd say that your best bet is that (b) doesn't have access to a Blu-ray player yet.

As to Netflix, let's for the sake of reasoning imagine that MS is offering similar services in all territories. Wouldn't that incur in the same overlapping as BR players, when evaluating the value of the console offer? I'm sure that there's more households with Sky boxes in Italy than with Blu-ray players. And I'm sure the same could be said of the various boxes in US or wherever. Plus, can't you basically use any Pc as a Netflix client - and incidentally stream it to your PS3? Not saying that it's a common solution used by non-technical users, only that the Netflix (or equivalent) offer of the 360 has not the same exclusive value as Blu-ray playing.

Edit: damn, Euphoria beat me to it while I was maiming my thoughts into english! May your kid keep you awake one thousand nights :)