For several reasons:
1. Sony is subsidizing the PS3, losing between $200-$300 on every unit. It's intentions are to make back the losses on game sales/licensing. But if a majority of people are buying a PS3 to watch movies, game sales will be low in comparison to the number of systems sold. This will deter game companies from making more PS3 games (which are difficult to program for anyway).
2. A PS3 is much more expensive to make than a stand alone, considering it does everything a stand alone does, but includes a large hard drive, wireless controller, blue tooth, that crazy cell processor, etc. If Sony can make a PS3 for $700-800, why can't they make a stand alone for less than $500? If it's so important for Blu-Ray to succeed, why are they releasing players with huge profit margins? I think the huge profit margins is the real reason BD got all the CE support. If Sony left BD off of the PS3, they could've released it at the same price at an X-BOX360 and sell 2 to 3 times as many units. Then, they could've released a stand alone player for $500 and a PS3 BD add on for $200. - Had they gone with this strategy, I think BD would've already won the war.
I bought a PS3 only to play movies. Sony lost $200-$300 to me and will never make it back on game sales. I truly believe that Toshiba never subsidized the HD-A1. I believe that a stand alone HD or BD player can be made for under $500. The BD side just wanted huge profit margins.
Doesn't Sony also get money from every BD movie sale? If they are subsidizing the PS3 to eventually make back its money on game sales, why doesn't the same logic apply to stand alone players and movies?