MS would have loved both Silverlight and HD-DVD. You would have both the online and physical distribution under your control. Why try to compete online vs. physical when you could win both? Then you could phase out the physical media and still be earning money while you phase in the online media.
Honestly, until I can get my 20mbps transfer speed for movies with no dips in quality, Blu-Ray will still be superior. 5mbps is not enough for a quality image along with 7.1 quality sound. Since I already have a Blu-Ray player and unlimited rentals from Netflix I really see no reason for me to downgrade my video quality unless I really need to watch something now (which rarely happens)








