There is a great recording on YouTube of Steve Perlman of OnLive Video Game Service
where he talks through the engineering decisions behind creating his new video game service. Lots of engineering trade offs, rebuilding video streaming codecs from the ground up to be adaptive, etc, etc.
My real interest here isn't in the engineering decisions his team have made, but in the economic model that is powering his start up. In short, their call is that physical product is so last year. Physical products have massive up front cost of goods sold, with all the inherent risks (you have to pay for the r&d of the game, then print it, then distribute it, then sell it, and then hope it doesn't get returned, resold, or pirated). Steve's crew are bringing web economics to gaming. Steve rightly points out that video games are different from movies and music in that each play of the game is unique, and interactive, thus it can't be recorded and sold, the same way a movie can.
My interest here is in flipping this around, as a way of "saving" the movie industry. I think we all agree that Avatar is a massive tour de force of 3D story telling. But what if you could cruise around inside the story while it's being told. What if you want to look at the world from the lead character's point of view. Or from the hill above him. Or from space?
What if you could cruise around inside of the Avatar story line, cruise out to the various locations, and leave location sensitive story tags. Upload youtube style videos of you talking about how you think about the story, from where you stand?
This would make movies social environments. This would make the movie impossible to steal by making it highly social. Hell, you could run an entire class inside the movie world, where the teacher and his/her students can write/narrate/critique from inside the movie.
I think Steve's technology could be used to power this style of story telling environment, along with many others.