Streaming Video Service Coming To the Wii
Gamasutra reports that Nintendo is partnering with a company called Dentsu to "distribute original streaming video programming via the Wii, with a 2009 launch confirmed in Japan, and an eye towards a later Western launch." According to a press statement, some of the videos will be free, and some will cost money. This will help to answer concerns that the Wii was lagging behind the other major consoles in video content.
I think a service like Hulu could compete quite successfully. "Pay" services(Hulu is actually ad-supported) usually have better quality video than free services, and earlier access to content.
You can always torrent high-quality vids, but I don't see that feature making it into the official firmware. Free ad-supported 480p streams is the next best thing.
And besides, many people don't mind paying a bit for the convenience these services bring, especially if they have good steaming quality.
I imagine if they had something like Hulu available on the Wii, then it'd be really popular. It certainly beats youtube when it comes to quality and availability of copyrighted content.
Second, in Japan HDTV is more common than anywhere else (tens of millions subscribers), and free ISDB translations started in 2003. Once you are used to HDTV, it's hard to go back to SDTV.