Personally, I think papabear is partially right - AFL is the main threat, but to League, not Union. With the allure of Olympic inclusion, plus the publicity of high profile defections to play in the World Cup, I don't think Union is anywhere near dead in Australia. That doesn't mean it will experience dramatic growth, or doesn't have its problems, but I think it is heading in the right direction generally, and I am cautiously optimistic about the future.
The NRL is the one most at risk. It has no international competition to act as a carrot, and it is seen, rightly or wrongly, as the most "thuggish" of the codes. You don't even get sin-binned for dangerous tackles in League.
Coupled with that, the NRL and Channel 9 have married their fortunes together. If one fails, the other is in major trouble. The NRL keep spouting their "billion dollar TV deal" and being "cashed up", but they are masking the reality of their situation:
1. The so called "billion dollar deal" was only 80% cash, and 20% free advertising on Channel 9
2. Channel 9 had to do some fancy accounting last year to even be able to continue to trade
3. TV ratings and crowds are both on the decline in the NRL. This reduces the advertising value for Channel 9, further pressuring their bottom line.
4. The increased salary cap has only meant bigger salaries for a few star players. Most players have seen no increase.
5. Their bucket loads of cash has not been able to stop star players leaving for rival codes
The AFL is winning the war, because they have concentrated on the kids. A friend of mine signed his 7 or 8 year old son up for AFL this year. He went online, and was shown all the available clubs in his area. He picked one, and a representative of that club CONTACTED HIM. When his son went to training, he didn't just receive a jumper, he was given a full kit, including ball. The only thing he had to give back at the end of the season was the jumper.
Meanwhile, just about every other child of my acquaintances are playing soccer. They will take kids much younger than other codes. My friend coaches under 8s, and he, like every other coach of a kid's team in Australia, was given specific age appropriate training drills from the FFA, with specific skills and playing styles to be taught.
Sorry for the long post, but I sometimes think we see the NRL as an unbeatable enemy, when in fact they have major problems of their own. I can't see us ever competing with AFL or soccer for participation rates, but neither do I think they will be the death of Australian rugby.