Even with digital distribution still on its early stages, for many it already poses a serious threat to other traditional distribution mediums. Be it music, videos, software or even books, among the young there's likely as much people preferring digital over hard copies.
But with such a broad topic, let's just touch on the video part of the equation. A great deal of TV shows and movies are already being (legally) distributed over the Internet and it's proven successful on certain markets, yet still lacking the widespread appeal that could put companies to make billions on monthly sales. There's also the video on demand (VOD) option which unlike Internet-based services only offers a limited catalog and relies on local cable services. VOD also resembles better a rental business model, while true digital distribution services are meant to replace retail sales with content that can be downloaded multiple times as needed by its virtual owner or licensee. The most unpleasant side of digital distribution can be resumed in three letters, however: DRM.
At the other side of the fence is Blu-ray (and old fashioned DVDs as well). In short, you get your hard copy, virtually no restrictions to do away as you wish over time, and in the case of Blu-ray, high resolution playback in all its glory. It probably lacks the 'push a button' comfort of digital but still stands as the traditional trusted model for most.
So, what's your pick for best medium? Do you believe digital is definitely bound to replace hard copies in the long run? What's been your experience so far with current on demand and Internet downloading services? Has your experience with digital distribution of software/games and music opened the door for you to download movies as well?