Sony's UMD is almost dead?

Multiple sources are reporting that the UMD format, used by the Sony PSP and thought to be a viable portable movie format at launch, is on its last legs.

Exactly a year after it was launched in the United States, the Sony PlayStation Portable's days as a hand-held movie-viewing device might be numbered.
Disappointing sales have slowed the flow of movies on the proprietary Universal Media Disc to a mere trickle. At least two major studios have completely stopped releasing movies on UMD, while others are either toying with the idea or drastically cutting back.
And retailers also are cutting the amount of shelf space they've been devoting to UMD movies, amid talk that Wal-Mart is about to dump the category entirely.

I always thought the UMD movies on the PSP were redundant when it could handle DVDs converted to MP4, and stored on the memory stick. But it is still sad to see another format die so soon, in light of the coming format war over Blu-Ray vs. HD-DVD.