Don't know if you guys saw this article yesterday or not.
DVD Sales Slips for the First Time Since 1997

I don't know about the rest of you, but I tend to buy used or budget titles any more these days or wait until the movie I want goes on sale.

I've intentionally avoided buying Blu-Ray and HD-DVD because I believe that legitimate download services will be the likely successor to the popular DVD format.  Mainly because of pricing.

What do you guys think?

I'm thinking more along the lines of Netflix's video download service, Amazon Unbox, and the Xbox Live Marketplace.

I am not interested in a download or a rental service.  I buy the films that I want and that is all there is to it.  However, there was a lot less released this year that I wanted.  There was multiple re releases for the sake of special editions and so on.  Also with DVD prices soaring in my market I also purchased fewer films.  I will continue to purchase the films that interest me and not buy the garbage that is being put out.  Also I have had nearly 9 years to build my collection and have nearly completed purchasing all of the films I have been searching for.  I also find that for some films, I have bought them in the secondary market which I do not think this article is taking account of. 

The hurdle that download services will need to get over is the whole feeling of ownership.  When I buy a physical disc in the store I can take it home and put it on the shelf.  I own it.  I can watch it when I want to, lend it to friend, I can take it off the shelf and over to a friends house and we can watch it together, I can use it as a coaster or a frisbee if I want.  It's mine and I can do with it as I wish.

In the state downloaded material is at right now, downloaded movies would be tied to heavy DRM restrictions.  I could download it to my PC, but then what?  Will they let me burn it to a disc?  If my PC crashes, will they let me download it again 6 months from now? 1 year? 5 years from now?  Can I watch it somewhere else besides my PC?  Can I copy it from one PC to another in the case that I own a laptop and want to watch the movie on travel?  There's just too many restrictions with downloaded material to make it accessible to the mass public.  Not to mention, hi-def material would be in the range of 25-40 GBs and who has the space to store 50 HD movies.. let alone the hundreds (and thousands) of movies people have in their collections.

The only place I see downloadable movies even being the least bit useable is in the rental market.  It's the only place it really makes sense right now and even for the next few years.

I bought mostly TV shows last year, and skipped movies that were being released on Blu-ray (still haven't gone Blu, but that was the plan anyway). And I bought Transformers on DVD because it was a red title in HD.