My Steam directory alone is 270GB, and just glancing through my library that's roughly half of the licenses I have actually purchased on Steam. No, I don't play them all, but why should I constantly redownload them? When I do decide to play, I want to play NOW, not tomorrow after it's done re-downloading.
Add to that my non-steam games, which are still often 5-20GB per title, though I've only got 3-4 of those installed usually. My DVD library, of DVD's I actually own and are on shelves in my living room: I have about 1.5TB right there. At 1.5TB, that's all MP4, it would be much higher if I also stored special features and raw images. Why put them on HD instead of using the DVD's? Well, I've already got 4 DVD's that I can no longer play without issues, and 2 of them had never even been out of the case before. I bought the DVD years ago and haven't watched it yet . . .because it's long. .. and I have a short attention span. . . . and there's a squirrel outside my window looking for acorns. In addition, I run XBMC in the living room, which gives me a wonderful catalog when everything is in MP4. I travel a lot. Ever tried to travel with DVD's? It sucks. I don't carry my entire digital collection, but it's simple enough to just load up my phone or my laptop with some movies and TV shows for while I'm on the road and don't have netflix access.
Then I've got my DVR, which is also in my computer. Dual HD tuners can fill up space pretty quick, and I only allocated 500GB to that with space recycled as the content ages or gets watched. Now, add 50% to everything for a Raid 5 array.
There's plenty of legitimate uses of that kind of hard drive space. But the **AA doesn't want THAT usage to be allowed either. My movies are not DRM'd and will play on Windows, my Android phone, my iPod classic, my linux machine, my Wii, and at a friends house off a thumb drive if we have a movie night. I don't have to worry about what is compatible with what, what DRM this device can play, etc. It just works!