As I know that many (and Nick especially) favour Blu exclusively, I would suggest the following as a compromise: if, like with "City Girl", there is an as good alternative on SD anywhere in the English-speaking world, release it as Blu only, if you must. Same goes for the forthcoming "Burmese Harp", for example. Those who won't have Blu for the moment can always buy the CC. But, please, and not least for the reasons outlined by Lubitsch, make things like Epstein, Franju, more Naruse or whatever you have coming that the world (i.e. this forum) has been yearning for for years available on DVD, too. Contrary to other statements here, regionfree Blu players are still pretty expensive here in Germany (around 400 Euros), and I have little intention to invest in such a player without first upgrading my TV set to make real use of it. There are people who simply want to see the films in good quality and with great extras; and who would rather buy 30 new discs than invest in new technology at the moment. I have absolutely no problems with DVD quality if it's decently done.
That's exactly my feeling about all this. If there is already a good DVD, then only release the BR. Otherwise, it's limiting the visibility of the movie.
Moreover, as you and david hare pointed out, the price of the technology is a real issue.
How much for a nice region-free player, a nice Full HD screen and a sound system ? I'd rather buy 100 DVDs with that money. Even if I know that the Sunrise BR is amazing.
I was also wondering about the "so niche" BR of City Girl. I would firstly think "niche + niche = so niche". But in fact, it's more than "do the niche already upgraded majoritarely or not ?"
Basically, if more than 50% of the usual MoC buyers already upgraded, of course, it's very few people, but it's more than half of MoC market. So, it's strong, indeed.
But, does MoC want to keep on expanding their buyers with a large visibility (ie DVD + BR) or just stay with the usual ones (and even throw away some), that's an other issue.
If 50% of the buyers still didn't upgrade, I don't think they will be very happy to have to put a lot of money just for this release. So probably most of them won't, and won't be able to see the movie. Cause, they won't either put $200 in the Fox boxset just to compensate the City Girl MoC.
In France, Carlotta and MK2 tried (with Fellini's Casanova and Sympathy for the Devil for Carlotta, and Les 400 Coups for Mk2). It was so much of a flop they basically held their HD release since (it's been now about 2 years I think).
But in the UK and the US, 'catalogue movies' in HD from specialized editors seem to have a much bigger market than we have. So I really understand the concerns of MoC, and all the buyers and money in the game.
But I don't know what was the first strategy for Criterion with the rerelease of Howard Ends only in BR, but they had to make a step backward, and now the SD release is on the way.
Maybe it's a sign.