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I think some people are becoming confused.

Sure, competition is great, and has been greatly beneficial to the HD video market thus far. It drives prices down faster, enables better features and overall quality.

But we've seen that already. Prices have already plummeted (This time last year BD players were still around $1000), and new features have already been announced and put out by both formats.
Now, the only thing competition is doing is limiting sales. The general public does not want, and never will want, two competing formats. People have been holding off their purchases because they don't want to invest their money on something that may or may not even be around in a year or two. The faster HD-DVD dies now, the bigger the HD market will become, and the happier the movie studios will be.

And as far as digital distribution goes, don't kid yourselves. I download music and video quite regularly myself, although owning a physical property has always been my preference.
But if you think digital distribution of movies will become the norm anytime soon, then think again. There are too many cons to digital movies right now, and although we will eventually see most people go that route, it won't be anytime soon.