Digital downloads are fine for rentals.
But for those who want extras, better quality of picture (Think a Download is as sharp as a the less compressed video on a 50GB disc?), subtitles, languages, deleted scenes, that DON'T come with DD... well, BluRay is it.
Also... you're paying about the same for a DD as a blue ray disc. $15~20 is typical for a movie. And then its DRMed to your hardware. Want to take it with you on the road and watch at Auntie B's place... sorry, gotta take your 360 with you!
And many 360s still only have 20GB drives. Even with a 60GB drive, how many MOVIES can YOU HOLD?
Lets see... lets say a 1080 2hr movie eats 15GB of space. And with the OS and game content, lets say 15GB is not Usable.
That's means you can hold this many 1080 movies on your Xbox:
20GB = 1 movie
60GB = 3 movies
120GB= 7 movies!
At least with a PS3, the owner can buy a $100 500GB HD and stick it in themselves.
So... the 360 is a replacement for Blu-Ray?!
THAT IS FUNNY! For little kids, yeah maybe. For grown ups with HD-TVs no.
I have hundreds of DVDs. Even those would fill up a 360.
A typical DVD movie may need 4GB of space.
Xbox 60GB drive = 11 movies.... still not close.
MS and Xbox fanboys (I do not own ANY console, yet) are kidding themselves if they think DD will replace BluRay anytime soon. OnDemand / rentals are fine. They make lots of $$$ on the rentals.