It payed off in 2005 as it allowed the 360 to launch at a more reasonable price and earlier then the PS3.  Now it is paying off as it looks like HD-DVD is going to be losing the HD format.  If blu-ray ever becomes mainstream they could just come out with a $99 player or something and make those 360 owners looking for the format happy. 

Of course there is that other aspect about future games needing the extra space and if that is the case then it will just be something to deal with.  I don't think it will be an issue but obviously some disagree and we shall see. 

As someone who had stopped buying DVD's years ago this whole format is a mute point especially once people start getting used to streaming or downloading right from their TV's., 360 or PS3 

@ El Nino

I have always thought that was one of the most attractive aspects of the 360. While it did hamper devs that wanted tons of space for games, no one had a crystal ball and could have predicted that Sony would literally pimp their PS brand to further their Blu Ray dream.

I eventually bought the add-on, but I had a choice. I didn't have to jump into the HD race. And truth be told, I got a steal of a deal and will still be watching HD DVDs when the format dies.

Talk about Spin.

The true winner in all this is Sony. To spin it as a MS win is just crazy.

Yea, it's great that you didn't try, because you would have lost... odd angle to take as a victory.

Nobody said SONY lost anything though you could argue on so many fronts it wasn't what I was pointing out.  Is rather simple really, not having hd-dvd built it allow the 360 to keep price low and now that it appears to be going bye bye they are not stuck with it.  MS got it right back then and got it right now by not offering it built-in.  Again this is nothing to do with SONY winning or losing but more of the decisions MS made towards HD-DVD and how I think it has worked out for them. 

Everybody knew the Blu Ray was going to win since it was announced for the PS3 .

Well HD DVD probably would have won the format war if the 360 included one because there would be more HD DVD players out there than Blu-Ray, the main reason why Blu-Ray is winning right now is because of the PS3 support of it.

The format dying doesn't pay off, they could of kept the HD DVD drive just to play games

I was going to defend my point, but the guys above did a good enough job :)

Before or after?  Did you want it built in which could have meant an extra $100-200 maybe more for the 360 or once it became cheaper and screw all the previous owners who now have a drive that can't support future games?  Also so far it hasn't been proven that the extra space is needed.  Don't think and correct me if I am wrong there any games being cancelled for the 360 because of limited space.  Again this could happen but lets wait until it is a real issue before assuming it will be.  Obviously it would have been nice if HD-DVD would have won but the point is that by doing it the way they did they have an exit plan.  Many believe that MS didn't really care about HD-DVD to begin with and was more of a diversion as what they will really focus is downloads which they control and make the most money.  I say so far it has worked out fine not great since great would have meant HD-DVD winning but if the numbers are right they making money on their marketplace.  Basically in terms of not being stuck with a dying format it has payed off.