The guys at AVS forums have another interesting theory:
1. Warner and Fox were going to go to HD DVD to end this.
2. Payola happened and Fox stayed pat so Warner went Blu.
3. Toshiba had no idea this was coming until just recently.
Theory seems plausible. The BR camp had an installed base advantage (thanks to PS3) but its attach rate is poor (I read 1,5 BR movies for every player) while the HDDVD camp was smaller but businness was healthy.
Favouring HDVDD would have meant DVD production costs at "next gen" profit (here in Italy it's €19-29 for an HD movie vs 5-15 for a DVD one, and I bet it's the same in the rest of the world). Both Fox and Warner knew that if they made an alliance whatever format they decided to support would have won.
Enter "x" that convinces Fox (through money, of course) to remain on the BR camp. Warner might have been surprised but decides to stick to the plan and jumps on BR wagon.
I'm really convinced that Toshiba didn't knew this was coming. A variant of the HDDVD (it's just the same drive with a different laser modulation system) is being evaluated to become THE next gen format in China. This country has a histhory of not-so-good relationships with Sony and the movie industry in general so they are basically siding with whom makes them paying less royalties. So Toshiba (which, btw, is as big as Sony and sells a lot of electronics components even to Sony itself because that's their core businness) wasn't prepared to this blow.
At this point, HDDVD has little hope of regaining momentum in the rest of the world. If Microsoft is smart, it will produce a Bluray addon for the Xbox 360 as they told they would if this format had emerged. A 99$ addon and a cheap core unit will steal some thunder from the PS3 and would make its life harder.
If I were Microsoft, I'd make Bluray disc backup a mandatory feature in Vista, just to piss off Sony and the other studios or force them to shift to digital distribution
Oh, btw, here in Europe the antitrust commission is probing Sony and the BDA association. If it ends up like Microsoft with Media Player, Sony might be forced to remove its Bluray playback abilities from the PS3 or face a huge fine for anticompetitive practices
Now, that would be fun to see!