I don't think UMD was ever intended to replace the DVD, the discs have far less capacity (good enough for a PSP screen, which is large and offers a high resolution compared to the Nintendo DS, but is small and offers a low resolution in comparison to a laptop). Blu-Ray is intended to be the successor to the DVD, not UMD. IMO it was smart for Sony to get the movie industry at large to support the PSP, I am sure mass production has helped to reduce production costs for their games. New PSP movies like Casino Royale are still being released for the PSP.