It's the price. The only reason Sony is trying to look elsewhere they don't want to admit the thing was too damn expensive for what a wider market was willing to pay. Blueray player or not, people just were not willing to pay $400 bucks for one. I wasn't, until 3 weeks ago when I got my PS3 Slim, which sits next to my Xbox 360. Now I have a good Blueray player and TWO great gaming systems.
Sony could have had a much bigger piece of the gaming market pie, if it hadn't cost so much. They banked on it being the EVERYTHING machine. Well as nice as it is, it wasn't worth that to the majority of people. Now that it is cheaper AND large (40" and above) flat screen TV's are getting ridiculously cheaper, this is the best time for them to push it.