This should open the door for both built-in PVR functionality, as well as allowing for possible IPTV use. The modem could download content directly from the internet using the data services and then decode any of the new compression formats used in Blu-ray and HD DVD.
Manufacturers are quickly moving to embrace these newer codecs for compressing video over cable and the internet (and satellite), and it's good to see it becoming commoditized to the point where it's being built into a single chip. Will we see the cable companies get into FiOS-like content delivery soon?