If XB360 still looks good, the format of it's media won't matter one jot. The only one-upmanship Sony can pull is to have PS3 playing HD movies, so people wanting an HD all-in-one solution will eye PS3 as a top contender. Plus image quality surely won't be an issue with PS3 as PS2's DVD playback quality was (though I see nothing to complain about PS2's quality lots of others have said it's playback was/is bad) as with that much media-processing juice Sony can apply whatever cleanup operations they want to the image data. That'll make PS3 a first class console+first calss HD movie player and an economical purchase assuming a sensible price.