I dunno why people ever bought into the Blu-Ray idea -- I see it as basically being the new Laser Disc.
Incremental improvements aren't going to radically shift an industry like this that already has such deep market penetration; most people aren't going to turn in their DVD collections for Blu-Rays for a moderate or even a good increase in graphical output or what have you.
As obvious as it was that Blu-Ray wasn't "replacing" DVD or anything like that, it was equally obvious that DVD was going to destroy VHS. It had everything over VHS: better graphics & sound; more space for features, etc.; more convenient storage; easier to manipulate discs than tape; less breakage; cheaper to mass produce. DVD's many advantages let it do things that VHS couldn't allow or sustain, like cheaply producing and storing television seasons, or a mail-order rental business.
Whatever takes out DVD will have to be similarly advantaged. I like digital distribution to eventually get the job done.
If your answer is "but it's too expensive/slow" that well may be. Right now, that is. But technology and prices change (usually the first up, the second down), and people will always want the convenience that comes with being able to click for something and have it magically appear in their homes. Companies simply have to figure out how to deliver this technology in a way that people will enjoy and afford, but once they do, that's how it'll go.
Till then, I expect people will continue buying their DVDs -- Blu-Ray is too expensive a transition for too minor an upgrade.
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