This aligns with the broader historical trends of the internet creating deep niches. You have to take the good with the bad. We wouldn't even be discussing physical media at all without the internet being how it is. Despite there being a large audience for physical media, they're not the majority. The majority has moved on.
I still buy movies on DVD but the players are a bit hit and miss. That said, I do frequently see Sony bluray players in second hand stores for a few dollars and that is how I have my collection of players, but that is not a sustainable system.
I just wish my PC case had a slot for the drive bay, that was a foolish choice on my behalf.
Of course, 99.9% of other BluRay players will also support DVD/CD, so yeah it still does seem silly.
I also remember my Dad’s disappointment when he put a standard DVD in our Wii back in the day. Those are literally the same physical format as wii disks.
Also I don't think Nintendo wanted to turn the Wii into a cheap commodity DVD player, they make most of their money on the games. It is a shame because the Wii was one of the most TV friendly interfaces and inputs, at least when the Wiimote wasn't being throw at the screen.
Sure, it wasn't cheap at launch and it marked a leap in console prices compared to previous generations, but it was around the same price as a standalone Blu-ray player as those were just coming to market.
So at that point, why not get the more capable console?