This news article reflects my same sentiments. Blu-ray may have won the format war, but it has already lost the overall battle. Streaming videos into your home is already a reality. You can do it with Netflix (their partnership with Starzz makes their list of movies to watch now much more interesting), Movelink (partnered with Blockbuster), Amazon, and Apple. Netflix launched their set-top box this year and Apple has had the AppleTV out for quite a while now. You also have Media Center extenders that take XP Media Center and Vista Media Center and allow you to watch movies from Amazon, Netflix, and Movielink including the renting and downloading all from right at your TV.
People are ripping their movies from DVD onto HDDs at an increasing rate as well (I can’t count how many Disney DVDs we have had to replace because of scratching). These HDD based movies are available through some of the mediums discussed above (notably Media Center) to be viewed without ever having to put a disc in anything. I see this mode increasing especially when you add to it the home movies, photos, and music collections that people are accumulating. As an aside the increasing amount of digital storage that the average user has puts increased emphasis on having a solid backup strategy. Even with the likes of Time Machine, Windows Home Server, Mozy and other online services, and even the improved backup capabilities in Vista there is a lot of room for improvement here in the consumer market. In the end Blu-ray will undoubtedly stay around for a few more years until the streaming options include HD quality, but its demise is already fixed. Let the streaming wars begin!