Just think about it -- the move from VHS to DVD was almost entirely unlike the transition from DVD to Blu-ray. In the former example, the quality improvement was incredible. Rewinding became a thing of the past. Full blown surround sound was introduced. Special features and tasty extras were able to fit. Interactive menus were born. Discs were able to be played on desktops and laptops. Compare that to the shift from DVD to Blu-ray. The disc size has remained the same (physically). Audio has only marginally improved, mostly at a level that only audiophiles can appreciate. Visually, there is noticeable improvement only for those with enough cash to snag an HDTV. BD-Live interactivity isn't nearly as captivating as it sounds on paper. Oh, and Blu-ray Discs are markedly more expensive than DVDs.
The reality is that there is far less motivation to switch from DVD to Blu-ray than there was years ago when consumers were tempted to leave VHS behind and enter the DVD arena. Yet, for whatever reason, Blu-ray movies are priced in opposition to that fact. The way we see it, BD will continue to be a niche product so long as it's priced like a niche product, and if it holds out too long, we won't be shocked to see the increasingly ubiquitous HD streaming snag away at least a small bucket of potential customers.