Let me address the multitude of mis-information on this thread...
The trouble with the computer home entertainment solution is compression. Today, high-def movie downloads mean Mpeg2 compressed files carrying 720P video with a 5.1 channel mix that doesn’t hold a candle to DTS-HD-Master Audio.
Flat out wrong. I can't believe that you are soaking this up without complaining. I thought audioholics would be better than this. High Def movie downloads are available with the much better h.264 compression. Most are at 720p24, including Apple TV and Xbox360, but Vudu offers 1080p24.
Most agree that Xbox looks better. Resolution is not the end all be all. Compression artifacts and color are more important. Vudu also passes DD+5.1 which is at least an improvement over low bitrate DD5.1. It is converted to full bitrate DD5.1 to the receiver.
Yes, it’s the classic battle between scalability (computers) and upper-end quality (home electronics). Have you seen the electronics inside most computer equipment? Any traditional hi-fi nut would shudder to see switch mode power supplies and audio output IC chips. Whether you’re a hi-fi objectivist or pricey-cable Audiophile, we have to unite to keep standards in home electronics.
As long as the signal remains digital until it reaches your precious audio equipment, who the hell cares about better square waves passed by your HDMI cable? It is simple physics and is the sole reason digital computers work. There is NO degradation. You all know this.
I would like to address more info here, but I am running out of time. I'll say this:
There are a few other advantages to downloads that you may not consider. First, there is no reason we can't have an iPod for video. Drives are getting bigger. You will be able to carry your full collection of video anywhere you go. Already the boxes are getting small enough to be almost portable. This is huge for consumers. You won't need to have a DVD player in your car, in your house, in your hotel. Just carry your iVideo and plug it into the display port on the TV. This is the ultimate solution. In fact, the ultimate would be to play it from your phone into the TV without loss of quality. Wait for this in a few years, and wait for ones big enough for full 1080p24 versions in 10-15.
Second, there will be no need for distributing a single format in a store, which opens up the industry to a much larger # of formats. Once the movie studios settle on download as a viable business model, more companies will crop up like Vudu who will offer increased picture quality for those who care. There is no reason Vudu, getting crushed by it's competitors, couldn't shift it's strategy to enthusiasts, and offer higher bitrate DD+ and better higher bandwidth 1080p24. I upgraded my internet for Apple downloads, and bandwidth will just continue to expand. Those without bandwidth will just use DVDs or mail order BluRay.
BluRay does not need stores to survive anymore. The internet, distribution by Post Office, and standard mail order services can continue to support BluRay and DVD. BluRay does not have to beat DVD. It just needs to get big enough to survive alongside it. This was the benefit of HD-DVD with flip disc, except that consumers were not far sighted enough to realize the tremendous benefit flip disc was to the entire industry. Toshiba, got this dead on and I am sad to see it go.
Don't you all get it! There will be no "One." The internet just won't allow it. All three can survive and thrive because ultimately, it is the content that matters, not the way you get it.