VHS was bad quality, DVD had good enough. The jump from bad to good enough has a much better impact then from good enough to amazing. While most people will make the switch to go from bad to good enough, not many will make the effort to switch from good enough to amazing, unless they are pushed in that direction.

The jump between vinyl and CD was also massive, but vinyl was still good enough. what CDs had though over the massive sound quality improvements was the added convenience of playing specific songs, not needing to turn it over, or play on the move in your car/walkman/etc, and added features such as easy skipping, shuffle, ripping, etc.

I would wager that it were those extra features + added convenience (and the cheaper price) which got people to switch to CDs over the massive improvements of sound quality. Blu-Ray had exactly the same features as DVDs (until publishers artificially decided to skip adding extra content on their DVD releases), were exactly as convenient to playing DVDs, but were more expensive. So I think for most people it simply wasn’t worth their time to upgrade from if all they got was to bump their picture quality from good enough to amazing.