Okay, here is my theory.
The switch from VHS to DVD came fairly quickly. I suppose because DVDs are smaller, easier to store, don’t require rewinding and are simple to use and jump around. When they first came out people purchased them more often than renting. I’m guilty of this as much as the next person. My personal reason was that a DVD could be trusted to stay working and not wear out, whereas VHS couldn’t make the same claim. And having the movie was my personal pledge that I liked it.
I’ve heard that the amount of DVDs being purchased is going down. I’ll assume the reason for that is that people are getting the idea that they no longer need to own everything and that renting is still a possibility.
Blu-ray and HD-DVD are out, cursed with each other so that no one is buying them until they settle their differences. I suppose it is possible they their existence is the reason that DVD purchases are down.
My theory is that whichever format wins, Blu-Ray or HD-DVD, that will be the last hard video format used.
This is based off of what happened with audio. There were records, then tapes, then CDs. CDs seem to be the pinnacle that people use. There are other formats since, but only true audio-philes use them; People who like to hear the spider crawling up the wall in the background while the band plays. For mere mortals, the CD is king. It has all the features most people need, at the audio quality most people will enjoy.
I am aware the MP3 and its derivatives are starting to take over. I consider those a soft format. They don’t have the same quality, and most people still get them by burning a CD. In any case it is stored digitally, not on a purchased piece of hardware.
That is the way I see video format heading. Blu-Ray or HD-DVD will be the pinnacle. After that, other formats will come out that have better quality and/or sound, but they won’t catch on. Until we get to holographic movies. Until then.
That said, I can see downloadable movies taking over. Only when people get hard drives big enough and the internet is fast enough. The same way MP3s exist today.
I could be wrong. For all I know, Blu-Ray and HD-DVD will devour each other and DVD will be the last format. But I think we have room for one more.