Here's another thought that could put Sony in trouble...

Third-party marketing.

Basically, like y'all said, most games will be cross-platform. If I'm Square Enix and I'm preparing Final Fantasy XIV or whatever, it's traditional for Square games to be on one platform only...lately it's been PS2. So here I am planning for the next one and I'm picking my platform... I'd be a bit nervous to send the game to PS3 because a player -- a fan of Final Fantasy, for example -- may not own a PS3. They want the FF game, but aren't willing to shell out the money for the system. Now Sony just gets in the way, so I'd rather take my game to Nintendo, especially with that cool Wiimote. Boom, Sony starts losing games...and sales.

If the PS3 doesn't take off ti could be in very big trouble. Sony is being stupid by using their game machine to win a format war. Sony fans are the losers here. But think about it if PS3 fails, not only does the system it self fail, but so does Blu-Ray.

Rumors are going around that some third party developers are dropping the PS3 exclusivity of their games. Right now it's rumored that Assassians Creed will appear on the 360 and possibly Wii as well as the PS3.

Sony could of very pulled an N 64.

My point exactly.

Yeah Ps3 really is putting too many eggs in one basket... I hear from many that they are considering to use blueray for movies too and no DVD movies can play on the system.

Yep, I've seen movies on Blu-Ray discs at Wal-mart, I forgot to check the price of them though.

Yeah CM the Blu-Ray format was made to be the next generation of video discs. But as far as I remember Blu-Ray drives could play DVD's, but I could be wrong about that.

Update:

Blu-Ray.com:
2.2 Will Blu-ray be backwards compatible with DVD?

Yes, several leading consumer electronics companies (including Sony, Panasonic, Philips, Samsung, Pioneer, Sharp and LG) have already demonstrated products that can read/write CDs, DVDs and Blu-ray discs using a BD/DVD/CD compatible optical head, so you don't have to worry about your existing DVD collection becoming obsolete. In fact, most of the Blu-ray players coming out will support upscaling of DVDs to 1080p/1080i, so your existing DVD collection will look even better than before. While it's up to each manufacturer to decide if they want to make their products backwards compatible with DVD, the format is far too popular to not be supported. The Blu-ray Disc Association (BDA) expects every Blu-ray Disc device to be backward compatible with DVDs.