It was pretty much over when Warner Bros went exclusive a month ago. Its nice to see they finally threw in the towel!
I see Blu Ray with a 5-7 year lifespan. You can already download and buy games for the PS3 and i'm guessing the 360.
500GB hard drives are small for next gen though. A HD movie easily takes up 30-50GB on a hard drive.
I don't see downloading full HD movies really mainstream until the following happens.
1. Cable/Sat boxes have integrated Blu Ray burners so you can export the movie off your hard drive.
2. Hi speed internet coverage becomes better for faster downloads. Standard speeds are going up everywhere but they need to get the country better wired up for Hi speed downloading. IE I think a standard connection should be 15Mbps down before they even think about downloading/streaming full HD movies.
3. 2.5-3.0TB drives become standard. Nobody wants a 500GB drive that can only hold 10-15 full HD movies before they have to delete and download new ones.