In-Stat's Bogen says that at the beginning of this year, media-streaming services such as Hulu and Netflix had 25 million subscribers. That number will hit 35 million by early 2012.

Video streaming is gaining momentum as a convenient way to watch movies and TV shows on an HDTV, a computer, a tablet, or a smartphone. Consumers now have at least a dozen ways to stream content to the living room (see "" for some examples), including the latest offering, which allows users to get . Video options for tablets, meanwhile, are expanding to include apps from Blockbuster, Hulu, Netflix, and assorted cable providers.

One reason for the growth of streaming's popularity is that broadband speeds--wireless and wired--are increasing. The Verizon LTE network can handily stream high-quality video at 15 mbps. Charter and Comcast offer speeds up to 100 mbps.

The challenge for Blu-ray is that the profitability of the streaming video market is growing faster than that of the Blu-ray market. Studios are putting streaming profits ahead of visual quality.