In addition to what scooby mentioned, there's also simply the fact that Sony is a supporter of Bluray as a medium for HD movies in the format war against HD-DVD. Getting a cheap Bluray player out onto the market is a way of getting the format out to more homes. After all, if brand new Bluray players are $800, chances are good that HD-DVD players will also be similarly high when they're new onto the market. So as a consumer, would you buy an $800 HD-DVD standalone player or a $500 game console that also plays Bluray movies? Considering that most movies out there will probably be published in both formats until a clear winner is certain... there's little to no difference to you the consumer as far as buying your movies as HD-DVDs vs. Blurays. So if Bluray players reach further market penetration, that also means you can sell Bluray players more easily given time.
It was the same thing with PS2 and playing DVD movies. Standalone DVD players were new back then and very expensive, and PS2 was a far cheaper alternative.