You can purchase the downloads using Microsoft Points. The TV shows will be purchase-only and the movies are rental-only (this movie will self destruct in 30 seconds). The new service is the major reason that the Xbox Live Fall update was recently released. One can also surmise that this is the reason for the 100GB hard drive spied in South Korea
It's really interesting to see these media companies vying for your living room. We've been hearing about the one-stop-living-room-box concept for a while (one device to rule them all) but it's fun to see it all happening. The PS3 is obviously trying to do the same thing, as is the yet to be seen apply iTV box. I bet Tivo is shaking in their boots. Welcome to the future.