My family recently tried the free month-long trial of Netflix. While it is kind of a cool service, I was rather disappointed in the "watch instantly" feature. Many of the movies that we were interested in were only available on DVD. I have been unable to find a pattern in what movies are available for online streaming and which aren't. Movies that aren't available include both old black and white movies and recent releases, popular movies and not-so popular movies. And while I can understand that obtaining licenses to stream popular films is expensive. Consumers would undoubtedly be willing to pay more for the service.
On another note, Disney has said that starting in 2011 they will no produce their movies on Blu-Ray only. DVD's have been protected by DRM for quite some time, which produces a legal roadblock to storing your movies on a hard-drive or flash drive (including iPods and other media players). However, the technical matter of overcoming the DRM was (well still is) incredibly easy (I won't go into the details, because they are easy enough to find, and I could get into legal trouble by "distributing" a means of circumnavigating DRM). Blu-Ray discs on the other hand have stronger DRM, and it is difficult to rip a Blu-Ray disc, in fact it is difficult simply to play a Blu-Ray disc with a computer (or so I have heard).
Now, my operating system of choice is Linux, which creates even more problems for me. I'm the first to admit that Linux is not for everyone, but it allows me to have much finer control over my computer than the two more popular OS's, and some of my favourite apps are only available for Linux. However, when it comes to playing movies, Linux does not prevail. In order to play most DVD's you need to install a library which is illegal to distribute in binary form in the United States, which means you either break the law, compile the program yourself, or don't watch DVD's on your computer. With Blu-Rays it's worse. At the moment the only way to watch Blu-Ray's is to first rip the disc, and then play it. Which is rather inconvenient if you just want to pop in a DVD and watch it once. And then there is the annoying fact that Netflix specifically blocks Linux from streaming from their service. Talk about discrimination.
So, what is my point? My point is that the film industry should be more concerned about the internet than about the next generation of digital discs. Our technology is becoming increasingly reliant on the internet, and increasingly more mobile. Blu-Ray's are nice, but I don't see them surviving long as the primary format for films. Rather I expect that soon, when we watch a movie it will be streamed from the internet. Look at the popularity of services like YouTube, Hulu, and Netflix Watch Instantly. I foresee that companies that provide similar services, if they provide quality products, will slowly replace physical media. But what such companies should remember, is that for it to be successful the streaming needs to be available to all platforms. Yes Linux is used by a small minority, but that is still thousands of potentially paying customers, and Android is based on Linux. All these millions of Android users will certainly want to stream movies on their phones. In today's technology world, physical media is becoming less and less relevant. Software is now downloaded and installed from the internet rather than installed from multiple CD-ROMs, music is played on portable media players and on hard drives, and is often streamed from the internet as well. In fact Google has recently released its Chrome OS with the intent that everything will be stored in "the cloud," meaning that all the user's data is stored on the internet, rather than tied to a single computer. I'm still waiting for the film industry to realize the importance of the internet though. You might object, Blu-Rays will still have a place in Blu-Ray players connected to TV's. However, I disagree, many Blu-Ray players are actually able to connect to the internet, and in fact a small, special purpose computer designed for streaming from the internet to the TV can actually be cheaper than a Blu-Ray player. And besides, if like me, you happen to have an old computer that you no longer need, you can convert it into a streaming device for your TV.
The internet is also already starting to change the movie industry in another way. That is, by allowing amateurs and hobbyists to cheaply produce and distribute their own creations. At the moment most amateur created content was created independently, and is generally low quality and short. However, it is possible that hobbyists from around the world could collaborate over the internet and produce full length films, that could then be distributed, either for free or for a price, over the internet.
I don't pretend to know the future, but I would be very surprised if the internet did not play an important role in the future of film.