If iTunes offered decent HD movies the Blu-Ray player would really not be needed. But instead they sell over compressed video with lossy audio.
If iTunes offered decent HD movies, Blu-ray would still be needed :
- iTunes requires me to wait for the movie to download. This will take longer than driving to the store on my Internet connection.
- iTunes locks the movie to my device, making it a pain to switch devices, lend to a friend. DRM is bad when applied the iTunes way.
- My Internet provider caps my download usage, which would severely limit the number of decent HD movies I can purchase any given month.
- All this for the same price as a Blu-ray, which gives me a physical copy, with extras, additional soundtracks (my GF doesn't understand English very well and I hate watching American movies in French).
- Speaking of physical copy, I would need to backup the iTunes purchase in order to prevent its loss in case of hard drive failure. I would also need something to store it, like a hard drive. Decent HD movies would take up a lot of space. Hard drives aren't reliable, optical media lasts for years and years.
So no, there's still a few obstacles other than just the movie quality of iTunes. Some of these obstacles aren't 5 years away from being fixed (Internet connectivity being the most glaring one).
I've had a 10 mbps Internet connection for 70$ per month for the last 5 years. I very much doubt 1000 mbps is coming in the next 5.
[*]The iPhone 4 has set the bar. Again.
Yes, especially when you hold it in your hand.