Now that the XBox 360 has DivX support, I can see the potential for digital distribution. I haven't had a video not work on my 360 with the latest update and the streaming ability is flawless. With good servers, you can download a gig or 2gig in a couple of hours which I think is reasonable. That may sound like a long time, but if they set it up right, you wouldn only have to wait like 30 minutes or so. Enough for the system to cash enough of the video to memory for it to continue downloading in the background.
More and more people are renting movies these and also have nice home theaters that can take advantage of the better quality video and sound. I have an HD-DVD player and it is great, but I don't really feel like spending $30 everytime to get a movie which I will only watch once or twice.
I think that if Apple opened the AppleTV to support DivX or Xvid (without hacking) and had HD movie rentals, we would see a surge in its sales. They would also need to add the ability to rent the movie from the living room, through the AppleTV and stream it directly there, not to a computer first---then the AppleTV next.
All the elements are there for it to happen, they just need to make it happen.
