According to this Scott Fulton piece in Tom's Hardware Guide, Hollywood is concerned about huge disk drives coming to market in the not too distant future. Snippets:
More space for portable consumer electronics is a no brainer. Who wouldn't want more space on their iPods and enough room for several movies on PMPs and currently rumored video iPods? Some analysts claim its not as easy as just building these new drives into devices. If there is to be a roadblock, it may come from content and media providers, including Hollywood studios, which may seek to enact regulations or legislation mandating the inclusion of digital rights management (DRM) facilities in CE devices that use high-capacity drives, as Michael Cai, senior analyst with Parks Associates, told Tom's Hardware Guide.
The moment you become capable of reading and writing movies and transporting that content across borders, Cai said, "Hollywood can get really concerned. What if you can carry like 20 movies with you all the time, and they can't control the content any more?" It's the possible crossing of geographic boundaries that's the problem, Cai said - a problem that wouldn't crop up if the media device were made to sit on your desktop at home, no matter how small it becomes.