Also, downloading movies is just as much of a niche as you say HD-DVD and Blu-ray are. Not everybody does it and if that's all we wanted to do when it came to watching movies, the internet would need to be a lot faster than it is and people would have to upgrade. As it is right now, it takes forever to download a movie (with DSL, let alone dial-up), not everyone has the space (audio takes up a lot less space than video, let alone 2 hours of an HD signal), the quality isn't nearly as good (even though some don't care about that), there would be a ton of restrictions if it went mainstream, etc.
Edit: Forgot to mention that the companies putting their movies online would need a ton of space as well if they wanted to put their entire catalog online. This isn't going to happen anytime soon.