To me you just illustrated why I think Blu-Ray may become the last successfull physical media entertainment delivery devices. Tech is simply moving so fast. By the time a spec is ratified and the players start shipping there is already something better in the pipeline. You can see this right now with the compresson used it Blu-Ray- by today's standards is takes up a lot of space. Take h.264 for instance, you can with a good encoder get about 8 movies on one Blu-Ray disc of similar quality to what is released. Compression marches at such a fast pace that physical players seem to be increasingly behind the curve. Heck even a dual layer DVD is able to store a 2 hour 1080p movie. While I think Blu-Ray is a great storage medium, and I think it will find success in the market, it already seems outdated as a means of consumer video transmission.

As for broadband penetration, that simply outdated. Right now we sit at 73.1 %   which is up significantly in the last few years. Granted it far from perfect (and is only people who have access to it, not actually owners), but I think it will make an impact, more-so in the a few years. But the trend has started, and we are getting to a point where people are starting to need internet access.

Have you ever downloaded a big file on a PC? It really doesn't hinder the performence these days. Also there is no way downloading would take hours and hours. I pay for 1.5mbps internet, about the slowest out there and a 720p 2hour and 11 minute movie took me 34 minutes, faster than the time to go to Best Buy buy it and drive back. Plus after about 5 minutes I could start watching it. Also software these days throttles you internet connection so that you still have enough bandwidth to still make use of the net. While downloading I was posting in this very topic.

I'm tired, but show me where that number is "broadband".  All I'm seeing is "Internet". 

[edit:  Update: 
April 12, 2006 - THE NUMBER OF U.S. SUBSCRIBERS to broadband high-speed Internet service jumped 32.3 percent to 42.9 million lines for the year ended June 2005, according to the Federal Communications Commission. This was an increase of 10.4 million lines over the 12-month period, with 5 million added during the second half of that period. The United States ranks 12th in the world for broadband subscribers, according to the Organization for Economic Cooperation and Development. Part of the reason for the low ranking of the U.S. is that other countries have subsidized broadband service, and their populations live in areas that are easier to serve.

The FCC found that the majority of broadband connections in the U.S., 61 percent, were via cable modem service offered by companies like Comcast Corp. More than 37 percent of the connections were digital subscriber lines (DSL) offered by telephone companies like AT&T.

DSL service is generally less expensive than cable Internet service, but offers slower download speeds. The vast majority of cable customers receive between 2.5 megabits per second (Mbps) and 10 Mbps in at least one direction, while most DSL customers receive between 200 kilobits per second and 2.5 Mbps, according to the FCC.

42.9 / ~300 = 14.3%
Let's say it grew at the same rate for the last three years. 
99.34 / ~308 = 32.3%
And much of the growth then was DSL.  How well does that work for downloading HD movies? 

Issue with downloading movies is that people are going to move from being used to having their collection at home on a physical media to having no collection at all and just being able to watch any movie they want at any time for the cost of a rental ( personally I don't see buying movies you download taking off much and lets be honest, if you can at any time for a small fee watch any movie, why would you even buy them ?).

Issue with that is that for the studios they loose the revenue from the sale and get increased revenue from rental, but all in all I would say they probably still loose revenue. ( for it to take off it has going to be cheaper for the customer on average, granted the retailers won't be in between making money anymore from the sale, but still I think the studio will probably loose revenue there).

Surely revenue is already being lost by not providing an outlet.

If I wanted I could download from PirateBay.Org a full SD movie in about 2 hours.

If I wanted to....

Where's the revenue stream there ?

Even if you don't - since when has a download had a substantial perf impact on a modern PC?

Well, I myself have a file server at home, but how would it work not having any physical media for my movies?

- Portability. What happens if I want to bring a movie at my gf's, or lend one to a friend? With BR I pick the discs up and place them in my bag. With digital only I suppose I would have to fight the DRM monster to somehow copy them and then play them somewhere else. Then there's the issue of format, because I have to be sure that wherever I bring them there's the right software and codecs...

- Durability. The bigger the storage size the more likely hardware failures become with the HDDs. We'll have to start worrying about RAID arrays into our file servers, about filesystem corruptions if there's a power shortage, about backups etc. My collection of CDs, DVDs and BRs will only succumb in case of a house fire.

I have had to deal with backup systems and databases at enterprise level for a while, where data availability end durability are important issues, and frankly I don't look forward to the idea of having to deal with them for my movie collection in my free time.
A combination of durable discs and digital "ripped" format for easy local sharing among all devices in my home looks like the only hassle-free way for the foreseeable future.

All new film's in the Movie theatres being released are being produced on Blu-Ray along with DVD so that point of your's is moot

also more Back catalog releases are being released on Blu-Ray now that the format contest for HD is over. Blu-Ray adoption is increasing faster than Digital Downloads due to the Broadband Cap that companies are also doing right now. All Blu-Ray drives play standard DVD's so Blu-Ray is not going anywhere it IS THE REPLACEMENT for DVD because the companies that make DVD optical drive's are all produceing Blu-Ray optical drives.

and as for HVD..blu-ray is already to use the same technology as HVD and since HVD is way too expensive right now it will not be for quite a looong time before it would be used for consumer storage long after Blu-Ray has been well mainstream in consumer use.

example:

InPhase Presents Holographic Rival to HD-DVD and Blu-ray

<img src="http://www.spotlightingnews.com/gfx/1248_1.jpg" alt="InPhase Presents Holographic Rival to HD-DVD and Blu-ray Ron Tarasoff: “This is an ideal way to store high-quality, high-definition movies”" title="InPhase Presents Holographic Rival to HD-DVD and Blu-ray Ron Tarasoff: “This is an ideal way to store high-quality, high-definition movies”"/>

Ron Tarasoff: “This is an ideal way to store high-quality, high-definition movies”

InPhase Technologies could start producing a disk the size of a DVD, which can store up to 60 times more data than a normal DVD, as soon as next year.

 

The disks will be capable of storing up to 300GB each using the "Tapestry" a holographic memory technology which stores data using the interference of light fascicles. Due to its technology, devices that use this disk will be able to read and write data up to 10 times faster than a normal DVD.

 

InPhase Technologies is not a new player on the market - it was formed by the alliance of Hitachi and Maxell. A public demonstration of the new disk was held at the International Broadcast Equipment Exhibition in Tokyo last week.

 

"This was done to investigate the feasibility of using holographic storage for broadcasting television content," Ron Tarasoff, vice president of broadcast technology and engineering at Turner Entertainment Networks.

 

Your Ad Here

"This is an ideal way to store high-quality, high-definition movies because the extremely large capacity of holographic disks enables us to store TV programming as files, and the data rate allows us to migrate files on and off the disks quickly."

 

"Our role in the commercialization of holographic storage is critical to Maxell's overall strategy of technology leadership in recording media," said Tom Tanaguchi, VP and Executive Officer of R&D at Hitachi Maxell.

 

Today's DVDs read data by measuring the microscopic ridges on the surface of the disk. The same technology is used by the next-generation Blu-ray and HD-DVD formats, but they take advantage of shorter wavelengths of light.

 

Light from a single laser beam is split into two beams, the signal beam (which carries the data) and the reference beam. The hologram is formed where these two beams intersect in the recording medium.

 

The process for encoding data onto the signal beam is accomplished by a device called a spatial light modulator (SLM). The SLM translates the electronic data of 0's and 1's into an optical "checkerboard" pattern of light and dark pixels. The data is arranged in an array or page of around a million bits. The exact number of bits is determined by the pixel count of the SLM.

 

At the point of intersection of the reference beam and the data carrying signal beam, the hologram is recorded in the light sensitive storage medium. A chemical reaction occurs in the medium when the bright elements of the signal beam intersect the reference beam, causing the hologram stored. By varying the reference beam angle, wavelength, or media position many different holograms can be recorded in the same volume of material.

 

In order to read the data, the reference beam deflects off the hologram thus reconstructing the stored information. This hologram is then projected onto a detector that reads the data in parallel. This parallel read out of data provides holography with its fast transfer rates.

Follow the money trail. No one in the movie industry has any desire to move to a strict DD format or even primary DD format. Retail stores (Like Best Buy) hate Digital Distribution. It just cuts into their bottom line and product lines.

No one in the industry has any reason to NOT support Blu-Ray right now. If you want movies to show off that new TV you just bought (In all of it's glory)? You need to get a Blu-Ray player. All you see is HD TVs for sale now and the Blu-Ray movie rack is rapidly expanding. It's only a matter of time until it's a full blown takeover.

Digital Distribution is several, several years away from mainstream viability and usage. It also will require a mindset change in consumers and more reliability of hardware. Which only increases the amount of time until it can reach the mainstream consumer.

exactly:

and since Blu-Ray also play's DVD's there is no waste of their existing DVD collection. HVD was being used mainly for the movie industry, not for consumer use, so that make's it pretty much a non issue for blu-ray because by the time HVD get's to the point of consumer adoption Blu-Ray may still be advanced to its HV evolution anyway "BR-HV"