Well thats the point of it, to have some kind of media distribution you need a close link to the customer. If you see that youtube has low quality, is still in start-up phase and is already 5-10% of all internet transit then it's clear that you'll need a backbone close to the client. A backbone that should be easy to implement and to maintain and should preferably be compatible with Vista.
You guessed it, Microsoft's wet dream is that all telecom providers will install a server in you streets, one for each neighbourhood, city... All running Microsoft software.
Digital media only needs some plastic and metal, a kind of format and some codec to decrypt it. And if you see that Sony had to sacrifice it's Playstation brand to get Blue-Ray back in the rat-race you'll understand how hard it is to just get a format out there.
Besides i don't think that there actually is a next-gen format. They tried the same with a kind of super audioCD and then getting audio onto dvd's but both failed. I don't really see the point of those. And CD-DVD-HD is 0.8-8-25 GB, as you can see the HD format has no real advantage point in storage neither.
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