We've known this since E3. The funny bits are the quotes of what Iwata was supposed to have said.
Well, ok Nintendo, I already have a box that can play games on, so you don't need to add that functionality either.
One of the big pushing points they put into their E3 presentation is that you can still play a game on the controller while another person is watching the TV. Yet, you can't watch a movie on the controller while another person is watching TV?
The simply don't want to pay the licence fees of around $6 or whatever it is to enable CD, DVD, and Blu-ray playback. The daft thing is, they could do it by charging you extra, say $6, to download an application to allow you to have this functionality.
Many will say meh, I already have a box to do that, but there are many like me that don't want multiple boxes lying all over the show. A console, a TV, and a receiver should be all I ever need.