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Digital Distribution is a perfect example of demographics at work. Some of the movie-going population will embrace it for the ease-of-use and simplifying what was (before for them) a more complicated and physically demanding exercise in squiring movies.
Yes, most people here (Including myself) will not digitally download new movies in lieu of getting them on a physical medium...
Another example is this: The Wii was the number one Christmas Item and is selling like hotcakes over here. The 360 is performing very well too, but not with most people who bought the Wii, aka first time gamers. While there is an overlap (Such as myself), both machines are marketing towards different demographics and the results are there already.
So, if a person doesn't know or care about the difference between 480p and 1080i and they just want the movie, then digital downloading will seem like this to them "Hey, I used to have to go to the store to rent a DVD, but now I can simply download it and start watching it!". The process will be slower due to the MPAA's sluggish attitude towards new technology like this, but since places like Netflix have already begun the mainstream dissolution between the old method of going to Blockbuster or Hollywood Video and paying the couple of dollars and driving back, and the new method of just waiting for the movie to start playing, this new disribution method WILL have people who will think its the best thing since sliced bread, and others who would sooner disembowel themselves on a pike before giving up their hard-coded movies. This is of course, if they market it correctly.
tl;dr: The digital download market is there and will be successful to a degree.
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Microsoft seems to be pushing for this. Although I don't see it being too successful till we see more area's of the world have a high rate transfer. The US isn't ready for this. There may be a minority for it but as a whole, I just don't see it catching on so quick. DVD's will still continue to be seller of movies while Blu Ray plays catch up with it. By 2009, we'll see a large HD base out throughout the world. By then, we'll see if Blu Ray really takes off. DD will probaby much more known during that time as well. It'll probably come down to personal preferences in the end. Download copy vs Software copy. Personally, I rather have the library in case and hand, not as a file stored onto a hard drive.
I am a dolphin, do you want me on your body?
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Joking aside, all seems to be turning right over to Blu Ray. But I really don't expect to see a big influx of numbers till the end of the year. 2009 will be the year Blu Ray starts.
kainlightwind