The thing is, the PS3 started the generation with a relatively negative public image. I believe that public image of a console is a huge factor in determining its sales.
When something is perceived to be undesirable from the get go, it's extremely hard for the public to change their minds on a whim. It'll take years for that to happen.
No matter how good the games are out for a system, people still won't buy it due to the system's negative image. This is probably why the N64 was outsold 3:1 by the first PS (The insistence on using carts makes them look bad in the eyes of both developers and consumers).
When I really want to play Blu-ray films, I'd buy a Blu-ray player. There are probably many other players to choose from. It's not like the PS3 has no competition in that area.
Finally, having a large surround system may be everyone's dream, and more and more people are buying it. However, does the majority of the population really need it? I'm sure most are just satisfied with the basics, and aren't overly materialistic to seek the best of the best in the home entertainment area.
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