Microsoft said back in January HD DVD is only "over when Toshiba says they're not doing HD DVD." Well, Toshiba hasn't even officially officially killed HD DVD yet and the Xbox team is already dropping an official statement on the sitch. The fact that they're even addressing it doesn't look good then, right? Well, just read the statement. You'll know why HD DVD lost.
"We do not believe the recent reports about HD DVD will have any material impact on the Xbox 360 platform or our position in the marketplace. As we've long stated, we believe it is games that sell consoles and Xbox 360 continues to have the largest next-gen games library with the most exclusives and best selling games in the industry. We will wait until we hear from Toshiba before announcing any specific plans around the Xbox 360 HD DVD player. HD DVD is one of the several ways we offer a high definition experience to consumers and we will continue to give consumers the choice to enjoy digital distribution of high definition movies and TV shows directly to their living room along with playback of the DVD movies they already own."
It's pretty non-chalant about the whole thing, the death of a format, one that they were supposedly "totally committed to." Sony, on the other hand, had to win this. They staked everything (including the entire PS3 project) on it. The "material impact" of Blu dying would have been a crippled Sony, probably a cancer-ridden PS3.
But, for everyone but Toshiba, HD DVD was just a stepchild they let into their house. The drive and consequence just wasn't there, even with its second biggest backer, Microsoft. (What would they have gained if HD DVD prevailed? What have they lost now?) We still think it'll be a while before you see a Blu-ray player from them—not as long as it'd have taken Sony to pump out an HD DVD player, but we wouldn't pick up a 360 w/ plans to use it as BR player anytime soon. [Microsoft]