Pure digital distribution depends on bandwith, and that's still a huge issue in large parts of europe...
So Im walking around Wal-Mart getting stuff for my trip and wandered into the Electronics dept. Magnavox BluRay player $128 and a whole section of new BluRay movies for $12 each. DVD movies - $15 to $19 Just sayin
I think Blu-Ray will become the next mainstream media. I don't think people will upgrade their DVD collection unless they have films they really love. I still have a load of old VHS that I never bought on DVD and still have a video player too. I just think that digital distribution will take people too long to get a new film en masse. Especially in the UK, we don't have a great internet infrastructure. If everyone who has a computer and currently watches DVDs had to start downloading films off the internet, it would take some major upgrades to make that viable without it taking longer to download a movie than it does to watch it. Not to mention the gift factor. I know people on here buy Steam purchases and iTunes purchases as gifts but I think the general population (me included) prefer to give people physical gifts for Christmas, birthdays etc. Once Blue-Ray drops in price for players and films, we will see it become mainstream. Afterall DVDs were really expensive when they first came out.