Kaleidescape was the first (and only so far) to market with high fidelity, lossless audio digital delivery content. Why do you assume they would get leapfrogged instead of being first to market again with expanded delivery mechanisms?The fact that Infinity Wars in HDR+Atmos downloads in 32 minutes, when the movie itself is 2 hours 29 minutes long seems to indicate we could stream full-quality movies if we allowed the first few minutes to be buffered.
Imagine, your K server only having the first 10 minutes of each movie and fetching the rest on-demand. K would never go for it, because it would undermine hardware sales and move the cost to streaming for which they have no recurring revenue unless they switch to a subscription business.
I think the writing is on the wall. Everything will be streamed at lossless resolution eventually. I don't see how that is avoidable. The question is: will this happen next year or in five years? In the meantime, K will have the better experience but there is an expiration date on it.
With regards to revenue, Kaleidescape has a smaller user base and so the ability to profit from content doesn't scale for them like it does with Amazon/Apple/etc. hence the devices themselves have to be a profit center. But the more the user base can grow, the more content can sell, the lower the entry point can get, the more users there are, the more content can sell, and on and on. There's a virtuous cycle to be had there.
So, I wouldn't say at all that they'll never go for it. Technically-speaking, I think they will be first to get there.
Of course, and per Kris' post, Apple and other quality has taken a bigger step forward. It's certainly an anything can happen market situation.