I knew that Sony were operating at a massive loss when the PS3 first came out, and also that it wasn't really selling all that great at the beginning thanks to the massive price tag. I assume they've made/ are going to make mondo profits in the long-term now - probably several factors more than the ridiculously popular Wii - just on banking on blu-ray winning the "format war" alone.
I just can't get into blu-ray myself, though. I'm not enough of a stickler for video quality to justify the extra price of the discs. (What're they, still £20ish a pop for a film?) And I've also just spent the last decade of my life amassing a giant DVD collection too, probably in the 500+ region, not to mention all the old videotapes I've inherited from relatives/car boot sales over the years. No way am I starting from scratch again!
Typical tight-fisted Scot taking the cheap option.