Again, if you decide, say, at half 11 tonight you want to watch Terminator and don't have it on dvd, or if you don't have a tv, the only option is to watch it at a lesser quality (though that said, my computers all have better resolution than any telly I've ever owned).
I don't think it's a problem for either film/tv or music. People will always prefer higher quality, they'll just also often be quite happy to settle for the most accessible, cheapest format.
Frankly, if you can watch something instantly, for free, actually going and buying a dvd, let alone an expensive tv and stereo, is a hassle.