Ummmm...

Did you know that Xbox360 Live is #2 behind Itunes for digital delivery. You can download many movies in high def? There are rumors that the Netflix library may come to Xbox Live.

Don't forget bittorrent - http://www.bittorrent.com/nowplaying?csrc=splash
I think rentals are 3.99 or something like that.

Then there is Netflix and Amazon's solution.

I BELIEVE one of the reasons it hasn't taken off as much as most cable companies now offer movies on demand and to many that is the easiest way.