Nils is absolutely correct.
No console to date has ever failed because of a Format War.
The death of consoles have been directly attributable to...
1. Poor/Limited Library: When a console has no games that interest many people, or the titles are generally considered lackluster & boring, or the size of the library is very small. Atari(At the end), 3do, NeoGeo, Jaguar.
2. End of their lifetime: The console was surpassed by either it's own or the game market's technology. Sega Master System, Sega Genesis, Nintendo, Super Nintendo, Colecovision, Intellivision, N64, PS1, X-box.
3. Poor decisions by parent company: Fragmenting the hardware base, or outright abandoning the console. Being forced to create an upgrade path, when the market had not yet learned tolerance of an upgrade path. Sega Genesis, Sega Dreamcast, Commodore 64(The market wasn't ready for computer upgrades as a whole yet).
But none of these consoles have ever died because they had done all the right things, and lost to a Format War. They all died because they made key mistakes.
As of now, HD-DVD is making the key mistake number 1. They have a limited library, and as time passes this will finish them. People will walk into stores, look at barely 1 aisle of HD-DVD titles compared to multiple aisles of BR titles, and the choice will be made right there. Few people will choose a platform with lesser selections, especially since with Movies they know that eventually everything will be available in 1 format and that format will be the one with a larger library.
The first key of buisness is having a product to sell that's more attractive than your competitors. Size of library is a key part of attractiveness. Should things continue as they are today, HD-DVD cannot win. BR will reach price parity, and it will have a larger library, before the majority of people are ready to adopt to High Definition.