I guess the streaming feature lends itself to more, but still, I don't forsee people buying 100 movies and keeping them all on their phone. Once I watch a movie 3 or 4 times I'm probably gonna take it off my phone and leave it on the computer no matter what format or size it is.
It really depends what the download format is. My best guess the movie inside the app is protected with some kind of Warner-specific DRM not FairPlay (which iTunes is using). This means I am at the mercy of WB - and if they decide to turn off their server then my app will revert back to demo mode ?