It will indeed be very interesting to see what happens. I have an xbox, and the marketplace is pretty cool (never really get anything from it though). I could see that being a huge market though, as there are so many people with xbox's and a lot of them obviously tend to have some extra income...
Of course, I'd love the AppleTV/iTunes solution so much better, but the one big advantage MS has is that many people already have the xbox (or could justify the purchase of one for multiuse rather than just downloading movies) whereas AppleTV would have to be a new purchase for everybody... but then again, Apple does have the advantage of being "the iPod company" to many people, so those people might look to Apple for a solution when this becomes more mainstream (and also, those millions of people with iPods/phones will want to play the movies on the go... MS and netflix would have to do something about that).