Then the studios began crying about lower DVD sales - and when did that crying start? When they thrust HD and Blu on the market. They shot themselves in the foot, frankly.
I would actually be surprised if the Blu-ray market is anywhere significant enough to have caused sales drops in DVDs. From what I've read, it was a combination of Netflix-type outlets and downloads with all the gimcrack machines that were gobbled up despite their costs of hundreds of dollars each. Young folks can download movies on their PHONES, ferpity'ssakes. WHY, you may ask, would anyone download a movie on a phone? Because they CAN, I suppose. Add to that an enormous number of PC downloads and you have sales figures dropping considerably.
That HD (which is not a sudden invention...we've been avoiding it for YEARS) and Blu-ray happened about the same time as downloading and disposable rentals came along does not, IMO, mean that Blu-ray or HD has any responsibility for the decline in DVD sales. Blu-ray might have had a larger share of the market, it's arguable, if the war with HD-DVD had not happened. Toshiba introduced HD-DVD first into the marketplace and then, for some unfathomably dumb reason, stagnated with it after Blu-ray was introduced. By the time HD-DVD was ready to gear up again, Blu-ray had taken hold and fired up imaginations of a large group of influential people. Sony was brilliant in putting Blu-ray playing capability into its PS3 game machines. Had Toshiba done that with the X-Box-360, we'd be watcing HD-DVDs right now.
HD-DVDs and Blu-ray discs are, to my eyes, exactly the same in terms of quality. HD looks as good on one as it does on the other. HD-DVD might have been able to upgrade to compete with sound quality and storage eventually had Toshiba managed to maintain its hold on Warner Brothers. Studios were moving toward HD-DVD when WB insisted on doing both and when Paramount switched exclusively to HD-DVD. What happened next is anyone's guess, but mine is that Sony paid out piles and piles of millions of dollars to gain the "trust" of executives at Warner Brothers that caused them to announce Blu-ray exclusivity two years ago. That was the end of that.
I do not believe the Blu-ray marketplace is draining sales from the DVD marketplace to any measurable extent. Other factors, I'm certain, are in play.