I think Blu Ray will have a much tougher time then DVD.

Blu Ray is competing against some tough competition
 - Upconverting DVD players
 - Legal Digital Downloads (Apple TV, Xbox Live)
 - Illegal Digital Downloads

Also, these won't go away. Digital downloads are here to stay and illegal downloads will be a bigger influence then ever considering that the high school and college students that pirated the most are now in their 20's and early 30's. So Blu Ray as to compete against a much larger population who's tech savvy unlike the start of the DVD generation where only a select few knew how to copy and burn dvd's.

Will Blu Ray be as big as DVD? Nah, I see Blu Ray only reach approx 70% of DVD's market size... which is still freaking huge and should make the Blu Ray group pretty happy.

I really don't see this happening, to download a high-def movie with all the extra blu-ray style features takes up countless gigs. It's not like little 5mb songs on itunes, and even with itunes cds still have a formidable business. We'll need terabyte harddrives and faster internet connections before we all buy movies on line and watch them like that. The idea is cool, but even itunes movie business I doubt is that robust just yet. People still even like to rent videos., and movies are a little more expensive then cds, they like something like that in their collection they also like to let friends borrow it, you can't do that with a download. Plus whats up with pricing for on-demand? It's a digital copy of the movie and the on-demand rentals still only let you keep them for 24 hours. It's just as expensive, it's a shorter time frame to keep and I can't switch a download from one tv to another.
I think the next generation of gaming consoles might push donwloads further, but can the internet even handle that level of traffic?

I download my movies and i have multiple HDDs. It gets annoying buying more and more expansions to my HDD collection to keep all my movies(BTW most my movies are around 800 MB). The tech is not there yet to buy and KEEP all the movies that you could keep with physical media.

and best buy doesnt make any money.....

Point is some people rent some own... both have been around for ages and will always be around. Disks will not go away and Downloads will be the next "rent". but if you want to own it most likely you are going to get the hard copy.

 there are also people who rent to see if a movie is good and worth owning.

To the posters talking about downloading and its drawbacks. Think about this - memory is dirt cheap these days. I can remember when my day bought an AST PC for $1,500 - it was 150mhz with a 2gb HD and I think 32mb of RAM. LOL - my Palm celly has more power!

Technology brings small devices. You can walk around with enough memory to power old networks - in the palm of your hand.

Broadband is here and will only get faster - for cheaper. I can remember downloading a song off the old Napster on dialup - I had to leave the phone line tied up overnight. For a 4mb song! Now? I can download a song like within seconds. Sure, HD movies will get bigger, but so will our hard drive space. Years ago, a TB was a dream. Now, I am waiting for a 100 TB hard drive. And our media to record gets bigger and bigger as well. Folks were gasping once at floppies - now, we can have gigs on our keychain.

The big thing to consider - paid vs. free. And honestly, free will win everytime ...

in 3/4 years people will have the bandwidth for a decent HD movie, but most people simply don't have the storage or the broadband for true HD.

An ok HD movie encoded with 264 is around 10 gig, and that's without any extras.

Thats more than most peoples bandwidth caps for the month and about 1/20th of thier entire HD space.

People want disks, people want to own movies. Yes rentals have thier place but people will always want to own, and downloads only last as long as the system does.

"The majority of that marketplace will be high-definition fare"

So, the remaining 70-50% will be Blu-ray?

How big is DVD rental compared to DVD sales anyway?

Just a quick thought...

The person that can't afford the bandwidth to download movies probably won't be buying a high def player and hardcopies anyway...

Until high dev players are sub $100 and the disks are the same price as current DVDs, high-def downloads via the digital cable box and through other means will have an opportunity to grow. I'm sure Sony recognizes that price is key and will do what they can to get player prices down. Without HD-DVD as a competing format, that incentive isnt' as great, however.