From this month's EGM:
EGM: in regards to HD-DVD as an optinal add-on, you said in the past, "We're not forcing movie technology on game players, but instead are letting them choose how to personalize their experiences." If this is true, why not sell a Blu-ray player as well?
Perter Moore: Well, because... when we look at HD-DVD, we're looking at a superior format. Microsoft is a backer of HD-DVD for a number of reasons, and I don't see any reason why we should support something that we don't believe in. We believe in HD-DVD.
Thanks to the guys at GAF