blu ray is a fad with no market penetration
No market penetration?!?!?
Maybe in America and other developing countries...

But certainly not here in Europe!
In my country (Switzerland) nowadays even 720p TV's are being sold in sizes below 25" only.
People literally throw away their perfectly working old SD TV's!
Last week my sister picked up a 26" 100 Hz Panasonic someone just brought to the recycling station. The guy said the set is still fine, but he had it replaced with a larger Full HD TV.
If their dvd player breaks, people replace it with a BD model because they are backwards compatible and can be found for the same price as a good (and already hard to find) middle class dvd player. Then they try out the free BD disc(s) often included with the machine and immediately get hooked. Because on a large 1080p screen the benefit is obvious - even to a layman!
The last thing Joe and Jane Consumer want, is having to buy an external BD drive and fumbling with ripping, just for being able to watch movies they already own (!) on their expensive Apple devices. So much for the famous Apple convenience...
Quality issues aside, paid download content still seems much more restricted than any physical disc.
While you can play dvd's from all over the world on your dirt cheap Chinese codefree player and the vast majority of BD titles are codefree anyway, just try buying Amazon.com download movies from Europe or iTS content (including music) from another country. Heck, you cannot even get your legally paid foreign Digital Copy activated. Huge fail!
In order to become a true GLOBAL success, paid download content must first achieve similar versatility and availability as the good old Digital Versatile Disc has.
Illegal downloads already have said advantage and the plus of being free!
So yes, download movies are indeed a worldwide success - just not for paid content...