I've just looked at D-VHS with Google. Looks like I've underestimated it a little. Well but 200 titles isn't really that much. Just for comparison: I have a little more than half that much in my cupboard and that's far from covering any kind of category. There bazillions of classics and titles I still want to see. Even if those 200 are the most popular titles from IMDB that's hardly enough to satisfy customers. Reencoding or even re-digitalising thousands of movies is quite expensive anyway but if they would simply "re-package" DVDs as D-VHS I'd rather go for the cheap DVD.

It's actually pretty old as well, it was released in 1998 and still isn't more than an elitist system. I mean it's advanced to DVD in a few aspects e.g., it can do HDTV 1080i but in my opinion the media alone (tape) disqualifies it. It's much bigger than an optical disc, less forgiving, sensitive against magnetism, to big too be installed into a PC etc.
For the industry, there's of course only one thing that matters: the price. I dunno but I cannot imagine that a tape would be cheaper than an optical disc, especially with repect to pre-recorded media. That's more a less a killer factor.

It's also 44 GB not 400 GB. So it's much more than a DVD but (probably) less than the upcoming generation of optical media. It's also using MPEG-2 which is getting aged and in the progress of being replaced by MPEG-4 codecs. Oh and D-VHS doesn't even record digital from analog media, thus such recordings it'll rot just like your VHS from the previous millennium.

To take advantage of HDTV resolutions you need an appropriate screen resp. TV set which takes another 1000$. Hardly worth it (or affordable), considering what lo-fi crap people get from P2P networks and are happy with.

That said, I wonder what the mistake was here because from 1998-2000 D-VHS it could have easily killed DVD before it took really off.
Bad marketing or what?

Regarding the topic: The problem with AVIs on a Mac is probably a missing codec. However, if it's possible to convert them then, hell, convert them put them on a DVD-RW watch them but archive the AVIs. Maybe next time you want to watch them you'll have the appropriate codec and if not you can always convert them again.