I think half the problem with movies on UMDs was that not enough people owned PSPs for that to work, but I think Nintendo can sell enough 3DSs for that to work, they just wouldn't be available at launch. Otherwise, the digital download route would be the way to go. The resolution doesn't have to be any higher than 480p, so hopefully they won't take up too much space. Then again, we may have Netflix on the 3DS, so who knows?