Most movies benefit from High Definition, the Lord of the Rings being the ones I'm most anticipating. And OTA HD doesn't look near as good as a properly transferred Blu-Ray movie.
As for those willing to use XBL, just over half of 360 owners actively use XBL, which only amounts to 10 million people. How many of those are going to start renting movies from netflix over and above paying for XBL? And how many people are going to start buying 360s with the intent to then rent movies via XBL? Are they going to start selling standalone XBL machines with the sole purpose of renting movies? You act as if the 360 will become a mainstream commodity like DVD, when in reality the system will sell 40 million units WW at best.
Your problem is that you're viewing this strictly within a console war mindset. Blu-Ray is supported by far more companies than just Sony (Panasonic holds more patents in Blu-Ray tech than any other company), and many of these companies make and are actively pushing standalone Blu-Ray players. This will allow Blu-Ray to reach a far larger audience than the 360 ever will.
And for all those failed Sony formats you mentioned, did you forget about the CD?
And just so you know, HDM has been growing at faster rates than DVD was in its early years.
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