I just upgraded my Xbox LIVE account to a Gold account this weekend and discovered the wonderful world of Netflix's streaming video. We were able to watch the episode of Jericho we were up to on the disc, and we'll be able to watch the next episodes without waiting for the new discs to arrive.
I do believe physical media are on their way out for movies and TV shows. I think it's possible we might even see first-run movies available for streaming video soon, though I think we'll still have movie theaters; they'll just have to provide more of an experience than you can get in your home. As it is, I see very few movies in the theater. At home, I have a 100" projector screen, 5.1 surround sound, and the ability to pause the movie whenever I want. Plus, I don't have to worry about talkers, seat kickers, or overly-loud audio. Right now, the only thing the movie theater provides over my home setup is the larger screen and for some movies, the audience experience (let's face it: some movies are better with a crowd).
Anyway, have a great Thanksgiving!