Because, first of all ... most people don't understand what bluray is .... nor own a bluray player. I upgraded my parents to bluray with a PS3 in October last year, and recently a neighbour to a cheap $100 bluray player that runs circles around her FREAKING ANCIENT crappy dvd player ... which only output cruddy 576p on component to her shiny new 46" HDTV ... omfg .. upscaled DVD's are awsome compared to crappy DVD players.
In my little 12 townhouse complex ... everyone else is pretty much over 55yrs old, and don't keep up with technology at all, so that's only 1/6 of the population (in the admittedly statistically minute sample) that own Bluray players.
So only slightly more than 17% of the population even OWNS a bluray player, or console capable of playing blurays.
Secondly ... avatar had specials on in most places (in Oz) .. $25 for Avatar Bluray, $20 for DVD.
Sitting beside the $25 Avatar bluray title are all the bluray catalogue titles, ranging from $33-40. batman is $35 at time of writing.
In comparison, Avatar DVD is sitting on the shelf for $20, besides the catalogue titles for $5-15, or even 3 for $10 if you have low enough standards.
Add to this that most movies are pretty ordinary (read stupid romance movies) or series, or pretty much sitcom garbage that a HiDef source will make absolutely no difference to the enjoyment of the film - it's all about emotions & dialogue, and quite frankly, some good looking actors (in SD) are a hell of alot uglier in HD
Compare that to the latest action blockbusters where that 9GB is just not enough to stop pixellation in fast scenes, and Bluray makes an amazing difference in clarity. Yeehaw!
Me! Owner of 2 Bluray players, 2x HDTV's with a fully ethernet wired house with 802.11N as backup, in other words -> uber-nerd, can't justify the price difference between a BD & DVD for non-blockbusters with lots of scenery/action .... how the hell are they going justify the price difference to anyone that doesn't even know the difference between BD & DVD?
Do I need to say more? Drop the price, and Bluray is in vogue.
Price is the ONLY thing keeping BD back now, and Sony-haters. (BTW: Sony also invented CD's & DVD - dumbasses)