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It's probably a bit too early for digital distribution to become the primary format for movies, especially since HD is on the way. Download speeds aren't quite where they'd need to be to stream stuff directly, and the industry has its head up its arse with DRM.

I can see Blu-ray getting pretty big eventually, but nowhere near the size of DVD. The only real advantage is better picture, while DVD against VHS offered better picture in a vastly more convenient physical package. There's also the issue of needing a new TV, as well as knowing the difference between a DVD and BR player, which is surprisingly hard for a lot of people. =P