If they could deliver true high definition using a good codec, they may be able to gain on the other services. The big drawback to the other services that offer high definition is using the WMV codec, it makes the video look "softer' than from a disc. Apple TV uses a good codec for high definition video, but their selection is sparse.
And Live makes you buy blocks of points to rent a movie. So you always have leftover points.
Now if you can use a minimum 4-6MB/s connection, the movie could start playing after a certain amount is downloaded. You would not have to wait for the whole 5+ GB to download. And if the compression was decent and worked well, this service could outdo the cable companies' high def offerings. Comcast's high def films have a soft look to them and you get blocking every once in a while due to their compression.
Hopefully Sony can learn from the others' mistakes.