A streaming movie/tv library is certainly the future of home entertainment, but there are a few factors that need to be sorted out first. I'm thinking here of flat-fee subscription streaming packages like Quickflix.
You need to be able to get the shows/movies you want, when you want them, without paying extra to play them. If any of those factors is absent, the whole exercise is rendered practically useless. Right now, in Australia, availability is abysmal. I have 85 titles in my Quickflix queue. Guess how many can be streamed? Three. Two of those are BBC TV series.
One of the problems standing in the way is that a vast catalogue of online entertainment does away with the need for broadcast TV (as long as your internet bandwidth can handle it). That means, if the content owners give control of all their back-catalogue to online distributors, they are automatically screwing over their existing broadcast partners. Not all at once - there will still be those who get their TV via free broadcast - but it would definitely cause tension with pay TV companies.
Streaming from an internet source means you need a vast amount of bandwidth available. The average Australian household watches 22 hours of TV per week. If we estimate 1GB/hour, then you need 88GB/month just for TV. I think the future of streaming entertainment services is that they'll be rolled into ISP packages, so they can be unmetered. It's most likely for Foxtel to attempt this first, in partnership with Telstra for the internet bandwidth to handle it. It may only be after the National Broadband Network comes into play, whose fiber-to-the-premisis connections should have the speed to handle HD video streaming with no apparent buffering.
All that being said, however, new media doesn't succeed by being just like the old media (in this case DVDs), only better. Quite often, it is an awful substitute for most of the features of the old media, but a giant leap forward on the things old media did badly. Streaming entertainment may succeed in ways I have not yet comprehended, but I suspect the availability of familiar content will be a big initial selling point.
Mokalus of Borg
PS - As for displaying our favourite movies, we can do without that.
PPS - Or, more accurately, we're doing a lot of that on social media instead.