Download/streaming is where most folks in the movie biz think things are heading.
The technological barrier becomes one of bandwidth. How do you deliver streaming HD content in a way that's fast and yet retains the quality that people with their increasingly high resolution TV screens will expect? If everybody is downloading HD movies, you're going to get huge traffic backup. (Think about how long it takes to download a movie.)
The other barrier is more one of social and economic theory. If I'm just streaming 1s and 0s, how do I "own" a copy of the movie? I'm expected to pay a fee to watch it, but is it unlimited? You're seeing a lot of this play out in the music industry, but no one has one industry standard of rules should download become the ONLY avenue for getting media content.
AND there's simple biology to deal with. The 1080i HD TVs everybody now owns is about the limit of resolution the human eye can process. I'm sure the technology exists to increase screen resolution, but the human eye isn't going to be able to process it. In essence, until we start beaming images directly to the cerebral cortex, as far as high definition resolution in concerned we've gone about as far as we can go.
All that's interesting theory to talk about if you're stoned, but not much use practically.
Eventually, I think you'll see some sort of internet/TV hybrid in which you order a movie which can then be stored on a (likely proprietary) hard drive. Personally, I'd like to see some sort of industry standard, but if the video and audio recording technology industry is any indication, everybody's shit will be proprietary so you have to buy a Paramount/Apple hard drive to watch a Paramount/Apple movie. (Kind of like PS3, Nintendo, Xbox, etc.)