I know I'm old but I just don't see the attraction of putting movies on a server. Anything on a hard drive needs to be backed up so it actually creates more work and cost than just buying durable media to begin with. Streaming Video is fine as a replacement for rentals or premium cable/satellite, but it does not seem like a good substitute for building a permanent library. In fact, between DRM, the short lifespan of PC hardware and software, plus the requirement to back up to durable media or risk losing your investment, it seems like a real PITA!
I am in the process of building a fileserver for my house which I will rip my DVD's to. There are a few factors that led me to that decision.
1. I am setting up a dedicated fileserver. This helps with a couple of the issues that upstatemike raises. For one it greatly extends the lifespan of the hardware. While I may replace my client computers every 2-3 years, I have a fileserver in my office that has been going for 5 years, with no plans to change it anytime soon. (I have added some HDD space over the years as data grew and prices came down) I also will set up in a RAID5 configuration, which helps to minimize the chances of losing data and having to re-rip Since I have disks for most of the movies, I will not do further backup.
2. The fileserver is also needed/useful for other purposes. It will store all of our pictures, digital audio, recorded TB, and backs up all the other client computers (my home desktop, my laptop, wife's laptop, kids computer, automation server, video server) The pictures and digital audio will be backed up again as there is no other hard copy of this. For the pictures and digital audio, this minimizes the need to transfer all this stuff every 2 years when I want to update my laptop.
3. The real advantage of having the movies ripped is having them available anytime at anyplace in our house, as well as being able to transfer them over to my laptop to watch on a plane, etc. The other big advantage is not having to deal with the physical media, I don't like to have big bulky cabinets, etc to keep them in. So with them on a server, i dont have to go over to a closet find what I want, then physically put it in a player, that now has to either be located near the TV causing clutter, or in a remote location meaning I have to go across the house to insert the movie. Kids also play a big picture in this. They tend to scratch the moves and re-watch them much more often.
4. I don't buy anything with DRM (that I can't crack)