Why the cost difference between blu-ray and dvd

[floridaswamprat]

One of the things that bothers me about blu-ray compared to dvd is the cost difference. Are blu-rays more expensive because they cost more to manufacture (and is the excess manufacturing cost substantial enough for the retail price difference)? Or is there some licensing costs for blus? Or is it simply supply and demand?

I think that if the price of blu-rays were more in line with that of dvds, that the format would overtake dvd sales. I am sure that for some the $5 or so difference does work as a deterrent (especially to those who are not enthusiasts).