Movie studios had a chance to get a piece of Netflix back in the day and they're still smarting from their decision. They're a bit sore about Redbox too, a company that rents their films at what they consider to be absolutely ridiculous prices.
The iPad is a slick device that's capable of, well, just about anything you want it to do. It can even play back high-definition content from iTunes, which would be a lot more exciting if it had a high-definition screen. At 1024x768 it falls short.