Why physical media will never die
People just like having something they can hold, or something physical to own when they hand over their cash.
Then there is the bandwidth considerations- as typical HD movies with lossless audio start at around 20GB.
Companies like Virgin have problems delivering constant 20Mb connections without traffic management let alone the kind of connection required to allow reliable streaming or reasonable download times of HD movies.
I also believe the ISPs will traffic manage these huge downloads as they do P2P content- as why should they supply the infrastructure for other companies to distribute HD movies but get nothing in return?
Then there is the storage consideration- ok hard drives are "cheap" but "affordable" media boxes with say a 1TB drive in will only hold 20 Blu Ray (BD-50) discs if you include extras, or approx 40 movies on their own.
When you think that many DVD owners will own many more than 40 titles you start to see the picture.
IMO most will use their existing movie providers (Sky/Virgin) as Sky provide HD movies, some on demand too- this will only increase over time. And on top of that the "buy to own" market will still revolve around physical media.
There is room for both.
A shame HD-DVD lost btw- although we recently "chose" Blu-ray. Sorry did I say choose? Of course we didnt we had to because the studios made the choice for us, so please stop saying the consumers had a choice.
If MS had bundled the 360 with a HD-DVD the story may have been different, as no doubt the PS3 was a huge part in this victory, and even though Im certainly no Sony fan Im absolutely delighted with our BD player- it genuinely surprised me how much of a leap it was over DVD as even though I knew the numbers I wasnt prepared for how good 1080p really is. Plus the upscaling of DVDs is superb, and its probably good enough that I wont need to double dip for too many of our existing DVDs.