I lived the time of the video format war and the comparison is flawed.

1. Betamax and VHS were released at the same time and were rival formats from the start.

2. Betamax and VHS were a lot alike (Beta having the better quality), and the key to the format win was not the price, it was the lenght, VHS put more hours in a single T-120 than a Betamax cassette. By the time Betamax improved this the war was over.

3. JVC improved the VHS format with the VHS HQ has a quality near Betamax, with this the difference is almost impossible to see for the common eye.

Now you're comparing this with the DVD/Blu-Ray situation??? let's see...

1. DVD launched in late 90's as the unified video format to avoid a war, Sony and Philips put their rules, and Toshiba and others like Matsushita put their rules as well. Blu-Ray launched in 2006 and it's not an unified format, he had to fight a war with HD-DVD (this is the real comparison).

2. DVD only handles 480i and 480p resolutions, Blu-Ray handles them and the HD-ones (720p, 1080i and 1080p), and HD-DVD did that as well... So they're a lot different, and they're not direct competitors.

Sony sacrificed PS3 sales to establish the next format for video. Of course they knew the cost of putting Blu Ray in PS3's would be attrociously high. But the thought of having licensing rights on the next video standard outweighed any loss in the gaming division.

And in some ways it payed off since it allowed Blu-ray to beat out HD-DVD and in some ways it hasn't worked out since Blu- Ray isn't going to ever be the dominant format.

I think that's sort of an unfair comparison as all PC's have mandatory hard drives that allow developers 'pack' the files into an executable installer which compresses the data a lot more.  I think if it wasn't the lowest common denominator there would be more developers taking advantage of the extra space...I remember Rockstar complaining about it and I'm sure Bioware had issues with Mass Effect as well.  The most recent example I can think of is Id's Rage which saw content get cut because of it.  Unless Microsoft issues some games with a 'HDD Required' label they may miss out on some titles before the next gen starts.  Splitting content across multiple discs won't always work either as in the case of GTA style sandbox games where you're constantly traversing between different areas of the map.  Before long the issue of fitting it all on the disc could be more of a hindrance than programming for the cell.

The blue ray does little to improve game play experience - some of the best gameplay i get is in the downloadable games like wipeout HD at under 1 GB ! or loco-roco !.
Also the PS3 physical memory of 500Mb total means you can only make a game longer rather than actually improving the gameplay or graphics much - the HDD can work with the blu-ray of help graphics and gameplay a little but it's still too slow to help much - so dont expect much from it.

The 25Gb does allow more high def cutsceens and in game movies though and extra content like interviews or such but most developers wont use this much anyway.

What improves gameplay most is better interfaces , high frame rates, and good design, not the total amount of space they waste.
Unfortunatley most games on console have poor frame rates around 30fps - and a crap dual thumbstick interface where a mouse pointing device would work far better, and blu-ray cant fix that.!

At the moment its the achilles heal of the PS3. It may change in the future but at the moment its costing Sony too much too manufacture it because of the BluRay.

How many Arcade sku purchases will be pissed off that day.  Although the moves their making with the NXE cheap upgrade option should somewhat ease the pain as well as ushering the death of the HDD less sku.

Similarly to Donkey Kong 64's included 'expansion pak' (I loath intentionally misspelt words!) they may consider making the first few games that do require the HDD included with the game as an optional sku for an extra $20 for 20GB...not too hard to swallow.

I also was alive during the VHS and Beta war and I do think that the comparison is a good one.  Beta was defeated because of price more than length.  Trust me.

Explain to me how in the blue hell DVD and Blu-Ray are not competitors.  That's like saying that albums and cassettes weren't competitors because they came out at different times.  Let me guess, you're one of those guys that claims that the Wii is in a different market than the 360 and the PS3.  It's a good argument when you're getting trounced.

Blue ray (Movies) and Hi Def (Games) need an LCD or Plasma TV to really show what they are worth. Does anyone have the market share of these equipment over standard CRT TV's?

considering most electronics manufacturers have dropping CRT TV manufacturing then yes I'd say there are many companies that have a decent amount of market share for HDTV equipment based on either Plasma or LCD technoogies.

@amp316 - I might not have even an tenth of the amount of movies you do but I have upgraded most of my DVDs andVHS movies to Blu-ray. I currently have 32 Blu-ray movies and do not plan on buying standard DVD expect for anime which will eventually be released on blu-ray.

You should upgrade some movies when they are dirt cheap like the Black Friday deals or using Amazon.com.

Sony make a mistake when adding the Blu-Ray player, everyone knows this. There is still room for DVD and after this Gen there will be a need to more space on the disk. MS know this and took full advantage of it. The PS brand for sony is now not there main focus, this is why the don't reduce the price. Any company that had there main product being out selled by its main two rivals whould have a contigency plan. This to me shows how much they are out of touch. I see romours of a price cut In march, that to me is 5 months too late. There are only 5 or 6 holiday periods in a console like, they have lost the first 2 and this one looks grim for them. They are now just trying to cut there losses and I think they are looking at an early PS4 release, which will be just a update of the PS3 to keep the cost down. They have been burnt badly this gen and they may even miss a gen, who knows they are in a lot of money trouble.