[steve-b]

Well, there is still something to be said for ownership of physical media - especially if some future government decides to ban certain productions. It would be too easy to turn off the feeds if the only sources are four or five big media companies.
DVD's might become obsolete but local storage of media probably won't.

That's one problem with this model. Another is that some people (including a fairly large percentage of the early-adopter types who are critical to any new technology) suspect that the media companies would dearly like to convert all media to a pay-per-view model, with little or no option to permanently buy copies of anything. Marketing video-on-demand as a substitute (rather than a supplement) to DVDs (or whatever) would clearly aggrivate that suspicion.

[JayNorth]

media companies would dearly like to convert all media to a pay-per-view model

Just remember DIVX that we all fought to defeat and won a rare victory!