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1080 lines of course have their benefits for users of extremely large screen sizes. One of the problems with marketing Blu Ray is, how do you persuade the public of its appeal? In the transition from VHS to DVD, the benefits were immediately apparent and both visibile and attainable for all age groups. The conundrum with Blu Ray is how do you create a similar distinction? It is hard to market the things I have mentioned - try explaining to your average punter the inherent superiority of VC1 over MPEG-2, or of the benefits of improved colour depth and a wider gamut.
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People tend to forget exactly how hard it was for DVD to get mass acceptance. It was far from a sure thing. In 1997, most people had a 25"-32" direct view set, which did *not* readily show the difference between DVD and VHS/Broadcast unless it happened to have S-Video, which most did not. Component video would not be commonplace in consumer sets for several years.
Also, DVD had the huge--and those of us in the hobby back then will tell you how huge it was--hurdle known as "Those Darned Black Bars". While hobbyists understood the purpose of letterboxing, the mass market consumer saw it as losing 20-40% of their already small viewing screen.
And, only four of the seven big studios supported DVD at launch. I believe the last studio finally came on board in 1999, two years after DVD's launch. It was full studio support and larger screen sizes supporting component video [and some would argue the porn industry releasing DVDs] that really helped the format to take off.
So yes, while ideally studios would have loved for BD to be adopted more quickly than it has, in hindsight and in comparison to DVD it's doing fine in comparison.
As with DVD, the benefits of 1080p are evident with 40" or larger screen size, it is only a matter of time before the average household will have that size of TV. BD has already largely overcome the OAR hurdle, but it did have to combat with HD-DVD which no doubt slowed the acceptance rate of the format. But all studios are now on board, and the final spec has been established. This fiscal year (2008/9) will show if the format will grow into a viable alternative or fade away. The looming recession (is it looming or already here?) may skew the numbers down a bit, but overall if BD doesn't experience decent growth this FY, it may signify that it will be destined to be a niche format. Not that there's much wrong with that, LD did fine as a niche format. But I for one hope it succeeds so that I can enjoy my films in 1080p glory.
