I think a lot of the people who are downloading things would love to buy them digitally but high quality digital versions do not exist.
I of course would never admit to piracy on this forum but I definitely spend a lot of money on games and it is ALL digital purchases. The convience is great and if you look at my Steam profile,
I definitely buy games I am interested in. I have also purchased roughly 40 games on GOG.com.
When it comes to movies though there are not many good legal options. So far the movie industry has launched their Ultra Violet service, which is pretty much about as bad a digital movie service as they could have launched, literally.
The video quality of UltraViolet movies is terrible, the ways you can watch the movies are pretty limited, it is something I would never spend money on.
If they would offer 1080p digital rips DRM free at a reasonable price (keeping in mind there are no disc pressing costs, no case costs, no shipping costs, etc.) I would buy a TON of movies. As it is I don't want to keep a library of DVD's or Blu-rays anymore, I want it to be all digital.
Instead of competing and embracing the new technologies they are frightened by them and their disruptive power and thus hamstring themselves in the end. Just look at Hulu, it has been too successful and now the networks behind it are considering gutting the service!