It's nice and convenient to download movies temporarily to your new Elite 360, but wouldn't you like the option of downloading a movie and keeping it? Course you would. Works for iTunes, just like it works for digital game downloads (including Microsoft's own Xbox Originals), because people are often willing to forgo physical ownership of a game in exchange for a small saving at the register. Pity, then, that Microsoft don't see it that way:
The research that we have showed that our audience is an audience that wants to rent movies through their Xbox 360. And if you want to buy something a lot of people want to buy it on DVD and have the physical media right now. That's a market that's very healthy and will continue to be so. Obviously we provide an HD DVD accessory that plays to that market and continues to buy the HD format.
Oh, yeah, the HD-DVD player. Can't believe we forgot that it even existed! What were we thinking? Sorry Microsoft, you're so totally right.