xenophon13 said:
This is the best argument against download movies:

According to The New York Times, the Internet movie download era is more distant than pundits think, for six colossal reasons:

First, downloadable movies require high-speed Internet connections — and only about half of American households have them. That number won’t change much for years.

it is true that many american households do not have high speed internet.  you're probably being generous by saying half.  however, in 2009 tv will make it's transition to digital and the frequency spectrum they currently use will be up for auction.  these frequencies will be great for a wireless broadband signal which could change things a lot.  right now a great number of households simply can't get a broadband signal (my parents for instance) simply because the cable company does not support it in their neighborhood.  wireless could change that (which of course depends highly on who wins the bid and what they decide to do with it.

Second, downloaded movies don’t include the director’s commentaries, deleted scenes, alternate endings, alternate language soundtracks or other DVD goodies. It’s just not as rich an experience.

how hard would it be to add those features?  not very as that it's purely additional content and could be added.  it's features like picture in picture that would be hard to implement but i don't see that as a breaking point for the format.

Third, movie downloads don’t deliver the audio and video quality of DVD discs — even standard-def ones. Internet movies are compressed to download faster, which affects picture quality, and offer older, more compressed audio soundtracks than modern DVDs.

i downloaded a movie from xbox live just to see how it looked and sounded.  i'd say it looked good.  certainly not 7.1 HD sound but fuck it, my sound system is stereo so what do i care.  and don't forget that MP3s are worse in quality than CD and yet it is still an extremely popular format simply because of the other features it adds such as smaller device size, lack of skipping, and negligible physical storage.  the example of MP3 doesn't make it a rule that people will go for the lower speced format with unique features but it's certainly disproves the rule that the higher speced format will always win.

Forth, today’s movie-download services bear the greasy policy fingerprints of the movie studio executives — and when it comes to the new age of digital movies, these people are not, ahem, known for their vision.

completely true and i think this is the biggest hurdle that downloading services will face. 

Fifth, no matter which movie-download service you choose, you’ll find yourself facing the same confusing, ridiculous time limits for viewing. You have to start watching the movie you’ve rented within 30 days, and once you start, you have to finish it within 24 hours. For example, the 24-hour limit. Suppose you typically don’t start a movie until 7:30 p.m., after dinner and homework are put away. If you don’t have time to finish the movie in one sitting, you can’t resume at 7:30 tomorrow night; at that point, the download will have self-destructed.

netflix - unlimited downloads from their entire library for at low as $9 a month.  granted - there entire library is only 7000 titles but it's a start and something i'm excited about.  to potential is amazing.

Sixth, there’s the fact that to protect their cash cows, most studios don’t release their movies on the Internet until (at least) a month after they’ve been available on DVD.

also true but it's kind of the same point as point 4.  right now execs are afraid of the internet but if they don't make a change eventually illegal services will cannibalize their industry just like MP3s are cannibalizing the music industry.

The rest of The New York Times article reviews and rates four currently available movie-download services — Apple TV, TiVo/Amazon Unbox, Xbox 360, and Vudu. Xbox 360 receives an overall rating of "D", the lowest rating of the four services.

http://n4g.com/tech/News-113808.aspx

The point is that pundits on both sides are trying to convince people they are right...we can post articles back and forth if you want!

 Blu-ray is scalable remember, 4-layer Blu-ray discs do hold 100GBs so it will be a while before anything goes above what Blu-ray can hold at an affordable price.

 For streaming video its a matter of the site/service your streaming from as its a matter of their limitations on speed.  If you stream from a site that maxes out at 200KBps your not going to have to let a movie buffer for at least 20 - 30 minutes before you even want to try to hit play and hope it buffers fast enough that you dont watch 40 minutes of the movie and hit the buffer which could cause you to either A. have to re-watch the entire movie from the start again or B. wait another 20 or so minutes to watch the rest of the movie.

This is the reason why On-Demand services in HD suck. You buy a link to the streaming content but if the connection to the movie takes a moment to connect successfully then if the stream for the movie is being watched by over a hundred people the transfer is slowed does which can create artifacts through out the movie due to errors in the buffer or worse cause an error which will make you have to restart the movie where you left off if the current media stream is back up functioning correctly.