If they price it low enough, there will be a market. What will all video players sold nowadays capable of playing DVDs. If they could sell them at 190, 295 or 333 (as during sales) and make a profit, why sell them at an astronomical (at least to a poor country as us) 750 or 895. That kind of pricing turns people off. Warner's pricing is better structured, that's why I no longer wait for sales to get their titles.
But if you bought say Walk the line for 750 and Feels like Heaven for 895 then see them on sale at 350 and 895 a month later during mall sales. You feel cheated, next time around a good title comes out at 895, you wouldn't buy it anymore. It happened to me many times.
And there's the problem of packaging. R3's packaging leaves a lot to be desired. If you want to corner the higher end market, then make the package as good as R1, after all, you are charging near R1 pricing.
Good packaging, right pricing = increased demand.
As to selection, hopefully Pinoydvd.biz would change that. Right now, you already have the entire Warner R3 catalog at your fingertips. Maybe Astrovision will follow once they see competition...
My feeling is that in time, DVD will be priced like VCD (P100-200) but barebones, no extras. By that time, Blueray and HD-DVD will be the high-end of the market. But not anytime soon... maybe 2010.
Personally, I don't see myself upgrading from DVD to HD-DVD, especially on titles I already owned, since I already invest a small fortune in them...then again, that's what I say when my collection was in beta tapes, then in video CD...