Blu-Ray hasn’t sold as much as expected.
There wasn’t enough of a qualitative difference between the picture offered by an upconverted DVD and that of a Blu-ray disc. Sure, analysts and reviewers can tell the difference (most of the time), but it isn’t a significant enough difference to make viewers sit up and take notice. It wasn’t like the jump from VCRs to DVD players or from giant tube TVs to flat screens.
OnDemand/PPV/Streaming/Downloadable movies on Widescreen HD displays. That’s why.