I think Blu Ray is taking its last gasps so to speak.
While Blu-ray discs will never reach the same rental or sales levels of DVD, thanks in large part to the introduction of streaming and download capabilities, the format is hardly taking its last gasps. While some are satisfied with the audio & video quality offered by services like Netflix, there is a significant number of consumers that require/desire higher fidelity. Additionally, some people still prefer to own physical media. Two things need to happen before Blu-ray starts its last gasps; the infrastructure needs to be in place to support significantly higher data rates (20-30 Mbps) to a plurality of consumers and mechanisms (i.e. digital media lockers) that allow consumers to retain and playback digital media across different devices/platforms - regardless of where it was purchased - need to be put in place and trusted by consumers.
When I first cut cable in 2006, there was nothing beyond youtube and a few niche sites streaming, at least to the masses. I could hook a computer up to my TV, but quality sucked and most networks didn't have much to offer. We had 3Mbps service, which was enough for most stuff we had to do.
Fast forward just 4 years, and I get my first Roku. Suddenly there's a world open to me, and there are a couple major players, dozens of smaller ones, and thousands of niche streamers. 720p/HD is standard for the major players, and everyone else is working their way up. I have 15Mbps internet service, and it's plenty for what I need it to do.
A little further in the future, and things are just going to get faster and more widespread. The genie's out of the bottle, and while we'll see some restrictions, the trend will be toward more media (even if how you pay for it may change). Blu-ray isn't going away immediately, but people like me, for whom 720p is fine given the extreme convenience of streaming, aren't ever going to adopt, and it won't be long before you'll be able to get similar, if not better, quality streaming.