I agree with you.  Especially for HD quality movies.  Mobility is one thing most people will not want to give up.  Most VOD services have content protection that would keep someone from making a copy of the movie to play somewhere else.  As good as high speed internet is getting, there still isn't the bandwidth to download true HD movies in a resonable amount of time.  Some of the larger internet providers are starting to test ways of charging for how much bandwith is used instead of just giving unlimited bandwidth for a fixed price.  Bandwidth charges will kill the VOD market.

Video on Demand is a ways away, but it is the future.  Imangine buying a small box (similar to a VCR or DVD player - or even smaller) - or, perhaps a TV with this "box" built in.

Now, either directly to the box via the internet or through some kind of memory card (like flash memory) you can plug in, you'll be able to load movies directly into the player/TV.  Or, imangine being able to wirelessly send a movie to a small device like an iPod or Cell Phone via an upgraded (i.e.: faster) version of BlueTooth.  Then, go to a friend's house and play it on their player, straight from your phone.

The common internet speeds aren't where they need to be yet, but I can download an SD movie using my CELL PHONE in about 5 Hours.  My Cell Phone.  Imangine if I was using one of the better internet options out there.

Is VoD the technology of tomorrow?  Naw.  Day after tomorrow? We'll see.

I think the portability issue is one of the main reasons why Blu Ray will never be anything more than a niche product. Nobody is going to upgrade the DVD player in their mini-van to Blu Ray, and there are millions of laptops and portable DVD players out there where an upgrade really isn't an option. I would say in the next five years, the DVD format will morph into the portable format of choice, while cable companies roll out HD on demand fast enough that the mainstream consumer won't feel compelled to upgrade.  Internet downloads to iPods, USB keys and cell phones will eventually happen, although with the number of competing players in that space (although with a general antagonism towards the consumer) I don't see a solution that is usable enough for widespread adoption.

I don't believe VOD is a threat to Blu-Ray at all. There will be some adopters, but there are still many people who want and will continue to want something physical to hold in their hands. It's just a "human" thing. Not only that, but I think we all agree that bandwidth is not equal across the board. While my neighborhood (in Brooklyn, NY) has DSL, we don't yet have access to Verizon's FiOS (fiber optic network). My parents, who live just outside a major city only recently got DSL in their area through BellSouth FastAccess DSL (it was previously unavailable).

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A quick response to Keith - I disagree slightly with you. I believe that as Blu-Ray continues to develop, in-car Blu-Ray players will become available (and yes, less expensive). We already see many of SONY's VAIO laptops already come installed with Blu-Ray drives and HDMI outputs - and I believe getting a Blu-Ray drive for your computer (or laptop) will soon be as easy at it is right now to get a regular DVD read/write drive.

I've tried some VOD. It all ends up sucking hardcore. Tivo Unboxed from Amazon is AWFUL. Most internet-based VOD is equally horrible. DRM ruins everything.

The only on-demand system that was any good was cable on demand via Tivo. The interface was beautiful, the speed snappy. It was great. But more and more cable companies are using their own DVRs. The Tivo and cable on-demand system was a smooth interface. There wasn't a lot of hoopla and software to futz with.

You're exactly correct. Take the Unbox video downloads. They cost just as much as a standard video rental, they take a long time to download, and you can only play them over a 24 hour period. With video stores offering a single disc you get to keep for a week that can be played in any player you want, VOD cannot compete.

It makes very little sense to me.

Until I can take a movie and play it on PC, on Tivo, and on a laptop all at once if I want, for a period of time at least as long as a rental, AND pay less than a rental (since it should in theory be cheaper), VOD is going nowhere.

Hey!!! I'm sure that the VoD is what we're waiting for. No more Blu-ray or DVD discs or players, only hard drives with a huge memory to storage teras of movies, music, data, and a lot of more stuff. We only need a really bandwidth.

Guys, don't you know anything about de Everex gPC? Wal-mart will not sell them anymore in their stores?

I believe VOD will take off eventually, but the DRM issue needs to be figured out and standardized in favor of the consumer. 

Tons of people already view amatuerish VOD when they go to YouTube, and watch video blogs all over the net.  They watch the content because it is interesting and because it is easy.

Movie studio VOD today is not easy (like Amazon and other's DRM), and some of the content isn't interesting (as I could only find one movie on NetFlix's VOD that was watchable.)  Perhaps Apple's iTV will make things easy and interesting.

"DRM ruins everything."

I do have to agree with this.  Until studio's realize that it's useless to lock down the product so tightly with DRM, pay-for VoD will continue to be a niche market.  "Free" VoD, however, will continue to grow similar to "Free" music downloads.

It will take years or a major technological breakthrough before VOD can be seen as a significant threat to Blu-Ray.

Here is how I see it; every home video consumer has certain consumption habits that are based largely on lifestyle factors (interest in movies, disposable time and income, access to technology, etc.)  A change in habit (not delivery vehicle) is only associated with a change in lifestyle, so it’s relatively constant for each consumer.  If you can envision a linear graph charting and classifying consumers based on habit; on the far left you have the occasional consumer.  We’ll call them VIEWERS.  On the far right you have the collector-enthusiast.  We’ll call them INVESTORS.  Most people fall somewhere in-between.  Consumers have different needs based on where they fall on the chart.  VIEWERS need convenience and value.  INVESTORS need quality and selection – and ownership.  As VOD develops and begins to offer more HD movies and deeper selections, it will slide across the chart to the right enveloping and converting consumers.  But until VOD can offer an endless selection of HD movies that consumers can view (with constant repeated access), it will not be a significant threat to packaged goods for the group of consumers on the INVESTOR side of the scale.  And it is only at that point that you can draw comparisons to what happened in the music industry...minus portability.