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That said, there is a problem with distributing movies on flash: I/O bandwidth, not capacity. 32GB flash cards are already available, if expensive, but the best cards have write capacity in the low tens of megabytes per second. A 10MBps card would take almost an hour and half to transfer a 50GB movie. People sometimes hand over their film or memory cards at the photo counter to process and/or print while they are shopping, but the delay would certainly put a crimp on mass-market adoption.
There are ways to deal with the problem. For starters, DVDs or Blu-Ray contain a lot of redundancy: multiple soundtracks in various formats and languages, extras, and so on, that could be stripped if a hypothetical machine knows the capabilities of the target device. Flash write speeds will improve, driven by the emegrence of SSDs as hard drive replacements, but there is still quite a ways to go.