
Maybe downloadable content will be the winner much further down the track, but for the moment I think the problem is that Blu-ray hasn't done enough to dethrone DVDs as the standard format.
Think about what DVDs had to offer over VHS - much smaller form factor (you can get about three TV seasons worth of content in a case the size of a VHS tape), significantly increased quality (both picture and sound), the ability to choose subtitles in dozens of languages with a click of a button, no rewinding, multiple soundtracks on the one disc, selectable camera angles, chapter selection, usable menus, special features, audio commentaries, no degradation of the signal from repeated use, etc...
Blu-ray offers... a slightly better picture. If you fork out ridiculous amounts of cash for the new discs, players and a HD Television to go with it.
Sure, I can tell the difference, and so can most people, but DVDs are actually reasonably good quality to begin with, and good enough for most people out there, myself included.
Clearly you have not heard of BD-Live?!
/sarcasm
"Today's robots are very primitive, capable of understanding only a few simple instructions such as 'go left', 'go right', and 'build car'." --John Sladek