The expense of developing film (be it commercial or home development) weighed heavily against its continued use by the masses once digital became inexpensive and easy to use. The masses were subsidising the professionals, funding R&D and maintaining economy of scale.
Given the continued advances in sensor density and quality, I expect that film will go the way of the LP - only diehard holdouts will keep using it, insisting on marginal advantages that the vast majority of people cannot discern. Digital eliminates one major processing step and cuts huge costs out of the process; your "originals" never lose quality over time so long as your files aren't corrupted and perfect duplication of orginals is trivial.
I think that film supporters miss the tradition of developing film and playing with the development for artistic/aesthetic effect. I don't doubt that the best film cameras and film can beat out the best digital cameras for quality ... but I suspect it's already a game of diminishing returns.
I also wonder if the defense of film vs digital is about elitism, much like audiophiles bemoan "mass-fi" then rant endlessly about how terrible that CDs are vs vinyl with their fixed audio quality, how they can tell the difference, blah blah blah... A good digicam can take excellent photos without as much effort and know-how as it used to take. Of course, displacing the low-level technical know-how doesn't compensate for lack of higher-level know-how, like good composition, lighting, etc...
As for the retail places that will "develop" your "digital film," that's actually looking to be a solid business model. They buy a commercial-grade photo printer and print your photos on nice paper with better results at a lower cost than if you did it yourself with one of those spendy "photo" printers. It cuts out the "developing" and people get high-quality prints out of the deal.