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Bandwidth
The most interesting thing to note about the new DVD standards is not the capacity as much as the bandwidth. DVDs allowed video and audio data to be read at about 10Mb/s.
BluRay allows a combined speed of 48Mb/s, with HD-DVD reaching a peak of just over 30Mb/s. Of course, at the higher speeds, you start to lose playing time. At the maximum data rate, a BluRay disc will play for only a little over two hours, reducing the effective maximum for longer content.
When DVD was introduced in 1996, K56flex and X2 MODEMs were introduced. These two standards were later unified into V.90. It was a lot more common for ISPs to only support 33.6Kb/s connections, with actual data rates often being even lower.
DVDs, with their 10Mb/s from-disc data rates, offered 300 times the speed of a typical home Internet connection.
Now, speeds of 8-10Mb/s are not uncommon. Optical discs still provide greater speeds, but now the increase in speed is only a factor of 3 or so, not even a complete order of magnitude.
Since home Internet speeds have been doubling roughly every 12–18 months, it should be possible to stream HD video content over the Internet at the same quality as reading it from the disk. Before then, it will be possible to download them with only a short lead time before they are playable, giving a much faster delivery time than services like NetFlix.
DVDs took around five years to market dominance, without the distraction of a format war. In five years, consumer Internet connections will be more than fast enough for delivery of HD content. Set-top boxes such as the Tivo or AppleTV will have the potential to deliver a lot more content to viewers than a DVD player.