Hi Greg and good questions.
First of all, the tubes will be exposed in any mod we do simply to reject heat. These players generate enough of their own heat and do not benefit from added heat from a pair of vacuum tubes.
The LX-800 has already proven to sound fantastic with the same mod circuit as the UDP-205, because the DACs are still SABRE and the implementation is similar.
The LX-500 will be something different. The AKM DAC is voltage output, rather than current out. This means that our mod can be a bit simpler. Also, there is a lot more room inside the enclosure of the LX-500 to allow us to design our own internal power supply for DAC and analog stage circuits, leaving only the Video circuitry and basic controls being supplied by the stock switcher. For the record, this is also what the LX-800 does, with its own internal transformer for audio and DAC circuitry. I believe the switcher that supplies the video circuitry is the same or very similar in the LX-500 and 800 models.
This simplification of our mod for the '500' model means that the mod cost will be lower.
As to whether there is still a market for disc players, look at the outcry over Oppo going out of business? The Oppo Sonica DAC, even though having the EXACT same DAC and stock audio circuitry as the 205 player was NEVER the seller that the 205 was. So, while yes, DACs seem to be a thing of the present, many people still want a disc player and units that can serve both audio and video function.
In terms of capital investment and return for this mod, their is not a huge capital outlay in the design of a circuit, PCBs and selection of suitable transformer. A much bigger capital investment is for any MWI product with our own enclosures, custom packing, etc. The mod business model does allow me to move fast and nimbly in this regard, responding to market changes.