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Players are cheaper, discs are supposed to be cheaper, (although my visit to best buy this week tells me otherwise)
Plus first gen bluray movies still used mpeg2 encoding... it's like they said "we've got all this space we aren't using... what can we do with it?
Yes, I wish there wasn't a split format, but as I see it now, the only solution is to just get all players dual format... kinda like the DVD+R/DVD-R war a few years back, not a big deal anymore, since all burners can handle both.
The ps3 is actually still one of the best blu-ray players. There were a few glitches here and there but they've been fixed in updates and it supports hdmi 1.3 and a lot of audio formats.
The 360 hddvd drive seems to be well built (much more so than the 360) and you can use it on a pc if your 360 dies.
The real winner is DVD though. The masses could still give all shit about hi def movies, even if they have an HD TV, and we are still a ways off from DVD not being the general standard.