Wow a lot of techie "newbs" here I guess.
First off the netflix that will be available though xbox live (which you need an active recurring netflix account to access BTW + an xbox live gold account) will not be in High Def as is the web site streaming content in standard definition. This is not permanent and Netflix claims they will be streaming high def in the future, but don't try to say that "netflix downloads" will destroy blu ray because they would have already if that was the case. Or any other cheesy streaming content site that's out there for that matter.
Secondly the content of netflixs' streaming content is not much to be desired. Most of these films are older and surely not in high def.
One cool thing you can do however is stream a movie and then invite your xbox live friends to watch it with you and chat from anywhere around the world.
On to the PS3-
The PS3 has recently added download able movie content to their web service and though I can't remember bc I don't use it, they will have content in full 1080p with actual
new movies that you might actually want to purchase or download. Now Xbox already has offered this for quite some time now and the content is in HD (optional). So while the netlix action certainly adds more content it does nothing to improve the quality.
PS3 has also started a TV/on demand/DVR function to it's euro PS3 service that allows you to use your PS3 as a DVR box to store content. Hopefully we will see this in the states sometime soon.
For the games-
Yes xbox is WAY ahead of the pact in this department. Even with PS3 coming out with MGS4, Resistance 2 and whatever other crap they offer xbox has a far superior line up not only with exclusive titles, but excellent download able arcade games.
However as far as writing the games Blu ray will take over. The xbox discs are basically DVD's and can only hold about 6-7 gigs. Blu ray discs are up to 50 gigs per disc so don't tell me that developers can't write for it. Actually I just read an article on ign saying that the developers of Gears of War are saying that they have pretty much reached the max graphically writing on xbox discs and while developers originally did have some issues writing for the PS3 with 50 gigs to work with they certainly have room to improve.
As for "Blu Ray being out of business" in five years I totally agree.
Bill gates actually said this in so many words long before the Korean dude and I can see it.
While people love their vintage record collections and dvd collections for that matter you have to admit it's kind of a waste of space. I mean my one friend has three out of four walls in his entertainment room covered with dvd's and it's just clutter to me.
The future of your media library will be much like itunes "cover flow" technology. And if storage is an issue they will just make it cheaper and offer it through their servers.
Sorry if I had too much to say on the whole techy front, but there were some things that needed to be clarified.