Are there only 2 companies in the world that produce the BluRay diode? Is BluRay supposed to win with such a small supply? You can't expect prices to go down that way. What matters is PROFIT!! HDDVD uses existing DVD tech, so it would be cheaper to press on. BluRay is not going to offer high returns and the consumer is going to pay premium prices for a longer period of time.
Anyway, why are game consoles supposed to be movie players in the first place!?
If BluRay fails, Playstation's days are numbered.