The cable companies are going to make a big push to get a piece of the HD market. When DVDs were released, they really didn't have the technology in place to make On Demand a reality. But the combination of low cost DVRs and better routing makes On Demand far more desirable for consumers. In addition, with On Demand a consumer doesn't have to make an investment in hardware.
Will On Demand replace solid media? No way.
Can it capture a significant portion of the the market? Definitely.