I don't know how likely it is, but its definitely possible.

Digital distribution for movies is the NEXT BIG THING. I'm already considering getting AppleTV (now with all the new announcements) - unless Ninty somehow get dd movies running on the Wii soon.

Disney may well delay BluRay, or just put a release delay (6 months) on all their movies, to help push people to the dd format.

...

Ever since iTunes took off - how many people are still heading out to buy PHYSICAL media music? Be it high quality audio, or just CDs?

The convenience of digital distribution far exceeds any benefits of BluRay (or HD-DVD).

Heck, we went to the movies tonight (saw 'No Country for Old Men' - which is highly recommended, and a really awesome movie) - and it cost us around $60 AU for 4 people (discounted!).

A BluRay purchase would have cost $40AU (ignoring that I don't have a player)...

...or a digital download/watch would have cost around $3-$5.

Money talks people - people are NOT interested in paying a 50% premium for "slightly better quality" - they would rather pay a fraction of the cost, plus have the added convenience.

...

Once I'm setup for dd movies, the cinema will barely get a visit (maybe 2-3 times a year), and DVD purchases will drop as well (only movies we are buying at the moment cost a max of $10AU).

How long will it take for BluRay/HD-DVD movies to come down to $10? Unless the format is discountinued - a very, very long time... 

Only about 90% of the Market.

 I still think it's just like someone stated above, when DVD was first introduced, I'm sure it got it's ass handed to it by VHS -_- I generally put competition to be between two similar products. Not different markets, yes their both forms of entertainment, but like I said one wont even play on some huge percentage of the TV's out there. It's a transition, all the movie and hardware company's need to do is wait for adoption rates, it's not like there losing ground is it? The movie company's will release their material on all mediums possible, DVD, Blu-ray, and digital, as far as I know not many company's supported the laser disk, so there must not have been much faith in the product, that doesn't seem to be the case this time around.

@Nuckles, when was the last time you looked at HD-TV adoption rates lol? Nothing but increasing there :P I've mentioned it before, you probably can't find a tv in your local stores that DOESN'T support 720p,  I know I can't at my local best-buy and Fry's.

@Saiyar, lol, so true xD 

I'd also like to add that anyone who thinks Digital Downloading of High Def movies is at our doorsteps is horridly mistaken :/ it will be quite a few years until we can depend on a service like that. Maybe DVD quality, but I believe were still a WAYS off from 1080p movies being streamed.

Rumor: Really stupid rumors populate the Internet.