Hope this isn't against any forum rules, but I feel the need to let this out. If I posted this in the wrong place, my apologies, please move it.
The main reason I don't want video downloads to replace packaged media is the region issue. It's less of an issue to Americans, who typically get good treatment, but living in the UK, I'm used to importing US Blu-ray Discs when there's a better deal.
For example "Cars" and "Ratatouille" appeared on BD here much later than in the US and in the UK, both of those films have had minor voice parts overdubbed with British celebrities, meaning they're not the original film and I'm not interested in them when I can buy the US version. Video downloads and their tied-to-region nature would likely mean I'd be a lot more reluctant to buy these films and I'd look to some other method of getting the real thing.
It works the other way around too - sometimes the US gets the shoddier treatment (the older edited version of "Eyes Wide Shut" with the silhouettes replacing the orgy scene). Would you actually want to be locked out of getting the real deal?
There's also Xbox Live's HD download service. I can hardly watch anything on it because whenever I try, I get a message telling me "This content is not available in your area".
I'm cool with downloads replacing video rental stores - nothing lost in my case, and a lot of convenience gained. But replacing real packaged discs - no thanks. If the studios ever want me to embrace that idea (we'll be ice skating in hell first), they're going to have to sort out this region nonsense and treat the whole world equally.
Reviewer & Tech Consultant, HDTVtest