I can think of at least 2 reasons why Blu-ray hasn't succeeded. The first is that research shows that picture quality is less important if you are actually enjoying what you are watching. Interestingly, enjoyment isn't so much linked to the picture quality as the quality of acting/animation, the script, plot, etc... At the end of the day, we don't care that much about whether things are a little less sharp. Heck, that's part of the reason there's such a market for poor quality copies. If it's a good film, you're still going to enjoy the slightly grainy rip you bought from a dodgy guy on the street. If it's a crap film, it doesn't matter how good the picture quality is, it's still a crap film. I can hear people already saying "But you'll enjoy a good film more if the picture is better!" Meh... If I weighted all the factors involved in enjoying a film, picture quality would be weighted very heavily until the quality drops to the point where you can't really see what's going on.
Secondly, Blu-ray appeared at the same time as many of the online streaming services that are now becoming so popular. It's a matter of convenience. I know it's probably good for me to get out, get some sun, while I go to some rental place or shop. However, I have to pay per disc that way, as opposed to the flat rate I can pay Netflix. This also alleviates any thoughts that I may have wasted my money on a film I won't enjoy. Don't like that bad action film you're streaming? Stop it and find another... problem solved. No need to go spend more money and make another trip.
"Lead us in a few words of silent prayer." -- Bill Peterson, former Houston Oiler football coach