Who said anything about re-buying all your movies??...
Who said anything about having to replace your entire movie collection? All Blu-Ray players should play DVD movies no problem, and most probably even upscale them which can make a small difference.
Blu-Ray is very crisp and clean looking compared to DVD's. You can't bash it saying "Well you can expect everybody to go out and replace their entire collection". Why would anybody think you have to do that?
DVD players aren't backwards compatible with VHS....Blu-Ray players ARE compatible with DVD, and it is easy to convert your VHS collection to DVD or store it on a HDD and stream it across your network.
I am also all for digital distribution in addition to Blu-Rays as long as there is no DRM stopping me from using my paid for, downloaded movies etc on any system that I want to. I should be able to take and use it where I want. Once this issue has been overcome it could really take off.
There will be a need for a physical media for a long time to come though, and Blu-Ray is a good successor to DVD. The added storage space is essential.
Also for games consoles, the games will need to come discs, who wants to pay out huge amount for a massive HDD to store all those games. Especially the kind of people who buy tons and tons of games, Considering current gen games on Xbox 360 take up approx 8GB each, with some Blu-Ray PS3 games taking up twice as much space.
You would need to constantly be buying bigger and bigger HDD's over time. You wouldn't want to trust a company to allow you to just stream the movie whenever you wanted from any PC, because if the company you bought the movie / game from went bust or decided to shut down their servers etc, you have lost access to it.
yes if there was no DRM you could just make backups but then you may aswell have just bought the disc in a store then ripped it to your HDD and store away the retail pack.