I really don't remember when DVD's took off, but I certaintly remember have my dvd sitting on top of my video recorder. I think it's right to say that the HD era will take off when players are below £100 and the discs are below a tenner. Blu-ray prices at the moment are a complete rip-off.
I seem to recall some people saying before DVD really took off that VHS quality was good enough for the mass market and that people didn't want to give up recordability.
What made DVD take off, besides the cheap players, was cheap discs, which could be impulse purchases while you're waiting in the checkout line at the supermarket.