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This coming Christmas should be a major test for Blu-Ray. They will have no competition from HD-DVD, and the prices of players should come down to a more reasonable level.

As far as the download services go, I can rent recent release DVDs for about $1 each from Netflix/Redbox. This is for physical media. I would maybe pay $2 for a instant online rental, but that is about my limit. The Apple TV/Pay-per view rentals are about twice that cost.

People who buy will want physical media. I do not see that changing for a while.