Eliminated? No.

Relegated to irrelevance? Yes.

There are still people who only use VHS tapes, I'm sure. Doesn't mean they'll matter in a number of years, either. 

I agree, and I hate to use anecdotal evidence to support a claim, but here's the thing.

My parents, who are 60 and 56 and not the most tech-savvy of people, haven't bought a DVD in years because they figured out how to download movies off of Direct TV (they burn the ones to disc they want to keep, but that's only due to the HD space on the Direct TV box lacking).

Physical media will DEFINITELY go away at some point: as the next generation of tech-savvy children replace the previous generations, they'll take no issue with media being 100% digital. If old hippies like my parents can figure it out and forsake physical media, then the next generation will be able to do so for damn certain.

Also, I firmly believe, on the subject of physical media, that people guard it because it costs so damn much. $22-25 for a new DVD is pretty steep, but $15 to buy it on iTunes ain't bad.

There will come a time when we have a rewritable media which holds several terabytes and we'll use it to store movie files, but I don't even think BR is going to be a stop-gap on the road to said media.

Hell, bigger media formats are already on the way...

http://www.engadget.com/2007/06/29/call-recall-unveils-multi-terabyte-optical-storage-solution/

If BR's claim to fame is the amount of data it can hold, it's not going to have that fact to boast for very much longer.

And honestly, I expect that, if ANY optical media will remain, it'll be the one with a player than can read increasingly larger optical discs, like how SD cards are scalable. The winner will be the player that can read 500 GB discs today and will also read 500 TB discs tomorrow.

You make a good point, and I'm inclined to agree.

I still think it'll take a while before those 500TB storage mediums come into play. Blu Ray might not hold dominance forever, certainly not for as long and thoroughly as DVD, but i still think it will be enough to justify having introduced and backed the format to begin with.

For a counter-anecdote, see above for my description of myself. And I'm young. I do watch a few things online, but I still buy movies at the same pace I always did.

blue ray to me is like laserdisc was to vhs. yes it sells alright but im sorry to say as long as people can buy movies via cable and sat services all the while owning a dvd recorder for personal use blur ray wont even get recognized as an "affordable" player. u say file size? thats all fine and dandy for console gaming but for just movies thats way too much storage. dvd right now is still being implimented by lots of people and to force them already to adopt to BR or any other HD format is just gonna kill it quickly. if u havnt noticed that after 60 years the tv's are all going digital but if u think bout it the analog tv will still be around just cause a cable box and sat box still sends that same digital signal to the analog tv. i say BR is good for gaming and so id HD dvd cause of storage but with bigger flash media and hard drives how long will that medium last? yes there will be physical media but dvd has a huge base and not many people wants to switch cause of their current tv. and price wise why spend 1,000's of dollars now when if u wait there will be cheap ways coming out like downloads and on demand. for example you guys say DLC wont make much of a difference cause people like physical media? now think bout this how long was the cd out before the mp3 took dominance? not long at all. not to mention there were the mini cd movement that had videos included on them. so in long terms i agree with smash even though BR does see some success it will not beat out other methods of watching movies.

(first day that TMNT was released on video i did NOT go out and buy it from the store but i DID buy it on demand and burned it to a dvd via my dvd recorder for personal use and for my kids.) 

oh one more thing i have a friend at work that owns a 52" HDTV and will NOT buy an HD video player cause if he did it would cost him upwards to 2,000 dollars to replace every single dvd he owns now.

he doesnt care and alot of people think the same way that the whole HD movie movement  will just not be what they want in the long run since the quality really isnt noticable between dvd's and BR. if u say oh there is a big difference i witnessed this first hand myself between the ps3 and wii and 360 the graphics quality differs about as much as a 5 mp camera to a 6mp camera. hope ya undrestand 

 I think if BR or HD formats in general had more steam behind them right now, I'd agree that BR will spend some time at the top, but the real issue is that consumers cannot be pushed into the future, they have to arrive there on their own.

It took an immensely long time for DVDs to catch on, despite the massive improvement of picture and sound quality over VHS on any existing TV, the lack of rewinding, the smaller shelf space, the extra features, the durability.

The point is, even with a bevy of improvements over the standard VHS format, getting the mass populace to upgrade was very much like pulling teeth, despite the fact that DVD was an affordable and logical upgrade. DVD is, in every way, shape and form, superior to VHS and the improvements were obvious.

But HD just doesn't have that same leverage. Not only are you buying a very expensive video player but you also need a better TV to actually see any improvement, and this is something that the vast majority of consumers won't be willing to do.

This whole format war reminds me of Minidisc and how it was destined to replace CDs until MP3s came along and killed it. I can't help but see BR in the same position: the next likely candidate until a superior online format comes along and kills it.

In OTHER news...

http://www.engadget.com/2008/02/26/itunes-now-number-two-us-music-retailer/ 

iTunes just beat Bestbuy for music sales. As soon as they topple Wal-Mart, downloadable music will officially be more popular than physical media.

Looks like CDs are on their way out... 

I also state that whatever the mainstream finds the most intuitive/user friendly will take the lead, thus making the most money. 

Yeah, it's like I said, the public will adopt what the public wants to adopt.