Physical media at home is in decline, and has been pretty much since the end of the 2000s until today. While many like physical media for many reasons (especially privacy and constant availability), economics of scale make the cloud computing trend we're seeing only likely to gain more steam in the coming decade.
We, as a people, have an obligation to reduce waste and misuse of planetary resources in any way possible. The mining, extraction, and refining of resources to support a dying medium such as a DVD or CD is egregious and completely unnecessary. We have the technology to completely do away with physical storage and provide everyone with access to live streaming and download from a cloud server.
Maybe further down the line they can be replaced by downloads, but right now to many people still watch DVDs a lot, and downloads have not took off to be as big as DVDS are. Once people quit buying DVDs and using them, then we can swap them out with digital.
Some people like to have the real thing to create a collection with. I don't think that HD DVDs should be replaced by live streaming and downloads. Downloads can be a problem because if you lose your computer you could lose all of your movies. Many times you can download them again, but not always.
HD DVD's were released as a competitor for Blu Ray discs. We still have normal DVD's as well. I do not believe we are ready to give up these discs because downloads and streaming are not fully compatible with every device that is on the market. I still prefer to have discs of my favorite movies.