As part of their partnership with ABC/Disney, Microsoft now has the first three seasons of Lost and new episodes from the current season on Xbox Live Marketplace.  The deal comes when you look at the cost $2 for Standard Definition and $3 for high definition per episode.

The retail copies run $60 for the DVD and $96 for the BluRay version while on Xbox Marketplace it's $48 for SD and $72 for HD.  A $12 savings for the SD copy and $24 for the HD copies.  There are definite benefits to getting either version depending on your preference.  You don't have to buy all the episodes if you purchase from Xbox Marketplace but you get a 720p version without any special features.  You can also go to amazon or other online retailers and buy the DVD and BluRay version cheaper or you can watch the episodes online on your computer for free.

I think this is a step in the right direction for media downloads.  There is a distinct manufacturing advantage to not making disks and packaging.  That cost savings should be passed on to consumers but this has not been the case so far.  Downloading software normally is not cheaper than going to a store and often there is no protection if the download gets lost or corrupted. For digital distribution to work it was to be more affordable than going to a store. 

By making these downloads cheaper than buying the BluRay version of the media it also makes it less likely people will purchase a hard copy.  BluRay may have won the war against HD-DVD but the future is digital distribution.  I rather have my shelf space back for other things than holding DVD cases. 

Lost now on XBL Microsoft