- Most people don't give a shit about graphics
- Many franchises and genres associated with Playstation have declined massively
- Japan's market has shifted in favour of Nintendo
- Most people don't want a more involving gaming experience, they want a simpler one
- Most people don't know what a Digital Hub is and wouldn't want one if they did
- Blu Ray isn't any kind of incentive because most people aren't prepared to rebuy their DVD collection, or even select titles, because the improvements aren't worth it to them
- PS3 business model is going after a market that isn't there, to the extent even when the big games come out it still has no chance of ever reaching PS2 dominance
- Too expensive
The best answer would be, all of the above.