Hard drives aren't becoming more stable. If anything, the dropping costs of HDDs, paired with faster speeds have made them shorter lived. 3-5 years is the average life for a drive these days. I would not want to rely upon a hard drive to store my entire movie collection which would take up somewhere between 5-6TB. If my only available copies of my movies and shows were on HDD, I'd want a back up of everything on separate drives at minimum.
RAID arrays would provide fast and reliable storage, but the premium to set up even a 1TB redundant array (which would hold about 20-40 BR-D quality, AVC compressed HD movies WITHOUT providing redundant back ups) makes optical media cheaper. Additional compression over AVC or VC-1 would be unacceptable image quality wise until better, less lossy codecs can be created.
CES had a lot of coverage for set top digital video distribution boxes and there is a massive volume of potential here as a means of media distribution, but there are many details that need to be established before a total transition to non-tangible media can be made.
Ultimately, it depends upon the consumption habits of the average consumer. If there are enough broadband subscribers with access to fast enough networks and servers to keep download times reasonable for files large enough and keep compression low enough to reduce image loss and digital artifacts to a minimum, at a reasonable price with variable pricing options for different levels of use, it's feasible, but optical media is dependent upon far fewer factors to remain viable. There are a lot of details involved in relying upon digital downloads to keep the movie industry in the black since theater ticket sales are no longer enough.
It's not as simple as "I download 700MB movies for free to watch on my computer, so that's where the entertainment industry is headed."
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