Yeah, it is happening albeit slowly. Digital Playground has been pretty exemplary in the way they embraced HD formats. Their Blu-Ray catalog is shaping up nicely and it seems to be a profitable business. LFP/Hustler Video has also started to publish stuff on Blu-Ray. Other studios have also announced plans to publish movies on Blu-Ray.
The one thing that has amazed me is the fact that one of the industry giants, Private, has been really quiet on the HD front. I know they have been shooting most of their stuff on HD cams (as have every other bigger studio in preparation for the inevitable). Jason Colt was supposed to come out on HD DVD but I have yet to see that confirmed. Maybe they just don't see it profitable enough atm. :(

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