For sure. We actually just discussed this in my strategic management class and came to the same conclusion that they need to drop the price of players and the PS3. It should start a domino effect of more consoles/players meaning higher game/movie sales, leading to more interest by developers and movie studios, which means better selections and even more sales. Eventualy the economies of scale kick in dropping the production costs of both the players and discs making them cheaper.

And personally, the only thing keeping me from getting a PS3 is the price. I'm rooting for Sony to win out the format war, but don't see it happening the way things are going. So I may decide against a PS3 despite a lower price if they don't do something soon.