BTW, why does the OP not provide a link?

 Exactly, the addition of a BD drive is killing or at the very least hurting the PS3.  I agree completely, but in terms of long term profits this doesn't matter at all, because Sony beleives that Blu ray will be a big thing in the future, and if so, then Sony should be very happy with additional ching coming their way.

In terms of your 2nd point, b/c Sony is basically sacrificing their games division, at least for this generation, Sony Pictures is probably *giving* them a certain amount of $$$ yearly/monthly/quarterly etc for their trouble so that Sony Games will be cooperative.

Due to increased demand, Ritek has announced that they have begun the process of upgrading an existing DVD production line to produce an addition 250,000 Blu-ray Discs a month, effectively doubling their production output. Later in the year, the company expects to add a third Blu-ray line, bringing total disc production to 750,000 discs per month.

Ritek was quick to point out that the decision to upgrade an existing DVD production line to Blu-ray was due to it being much cheaper than buying a completely new line. The increased demand for Blu-ray Discs is said to be mostly due to the beginning of the 2008 Beijing Olympic Games.

http://www.digitimes.com/systems/a20080806PD218.html

 All you have to do is pick a random sentence and google it, that is if this isn't too difficult

The point is proof. You made the thread, so you have to provide the link.

You guys act like Blu-Ray and downloads are mutually exclusive, but they can exist together, and probably will for quite some time.  Downloads will push Blu-Ray to the wayside eventually, but it's not likely to happen for 5+ years (at least, probably more like 10), and just because they're supporting downloads does not mean that they have no faith in the Blu-Ray format.  They just don't want to be caught behind the times like they were with their tv division.  They were one of the first companies on the HD bandwagon, but the stuck with their Trinitron TVs for far too long, and were late to the flat panel party as a result.  They don't ever want to be late again.

Sony has already "sacrificed" as much of their game division as they have to.  They've won the war, and from here on out, they're focusing on returning SCE to it's former glory, because they want...

1. To eventually see ps2-like success yet again. They know what it's like, and they certainly want it back.

2. To keep selling lots of ps3s, because more ps3s sold means more Blu-Ray players in the market!  More ps3s sold = more games and movies sold.

Will they reach ps2-like succes again?  Not until next gen at the earliest, but they'll certainly be trying to get there.  They're done sacrificing, and now the focus is on rebuilding.

Perhaps you both live in countries where 100% population have, or will have soon, broadband.

Living in a country where 50% has broadband, and only a thin percentage has more than 10Mbps, I can see a market both for digital download and optical media, with different respective shares in every country, Sony would be crazy to ovelook either.

What? After 37 straight weeks of PS3 > 360 and now 3 weeks of 360 > PS3 suddenly the PS3 is taking a 'lethal beating'???

I say again- what?

You have a point but u need to realise that when PS3 started the generation they were like 6 million behind and stil they r 6 million behind.. So if they don't win and win by a reasonable margin then this deficit is going to remain and Developers will keep preferring the XBOX over PS3 as their lead platform and PS3 will keep getting the crappy ports and people will keep having less reasons to buy PS3 and the deficit will remain as it is till the end of the generation.. So you see its a vicious cycle for it.. sort of a deadlock for them.

And if i believe correctly Blu-Ray was in a similarly situation it was winning week after week but just winning and not by a big margin so it wasn;t able to generate the demand and momentun for them.. and the moment they closed the deal with warner the demands has increased considerably... If i have heard correctly Blu-ray movies has sold more in the first quarter of 2008 than it sold in entire previous yr along with the HD DVD... although if u remember correctly in 2007 there were many Buy 1 Get 1 and upto 10 movie per blu-ray player deals. So They need to win and win strongly... so far they have not managed to create a distance between themselves and XBOX and XBOX already enjoys the lead and now they have lowered the prices...