And they still outsell Blu-ray.

It’s mostly lots and lots of kids tv. Kids don’t know what 480p means and parents just want discs that are cheaper and more resistant to damage.

Exactly this - and sometimes they don't even bother with two SKUs and give you both in the same container for the DVD price.

A surprising percentage of the population cannot tell a DVD from a Blu-ray in motion at home, especially if their TV does upscaling.

Of course physical media as a whole is still way down. Streaming outearns physical by a lot. All physical media is less than half what just blu ray was 10 years ago.

Yes, so they can cover the price sensitive customers, and charge a higher price for Blu-rays for the quality sensitive customers.