ehh, until we can stream blu-ray quality videos over the internet i doubt it's going anywhere soon.
I don't think there's a decent way of getting 40 GB of movie onto an Air without plugging something in... and USB memory is still too costly in that range.
Blu-ray discs are 25-50GB, but they contain lots of stuff besides the movie (bonus material and other stuff). Dropping extra features, using newer codecs, and slightly decreasing encoding quality can pare a 720p movie down to 5-6GB. Over a 20Mbit connection, that's a 30-40 minute download. Definitely streamable.
In fact Apple, Netflix, and Amazon all do this already. They sacrifice some quality compared to blu-ray, but unlike blu-ray, you don't have to transport a physical disc to your home. Even though blu-ray is higher quality, you have to ship discs or travel to a store to get them. Video on demand is so much more convenient, and the quality is only going to get better as connection speeds and codecs improve.
Unless you're in Korea, 20Mbit connections are far from commonplace. And in many countries download caps are the norm, which would preclude watching more than a handful of movies a month.
International internet infrastructure has a long way to go before optical media is anywhere near irrelevant.