Firm Develops Optical Disc - for Cell Phones

VMedia produces a 1.2", blue laser optical
disk that holds one gigabyte per layer. Current discs have one layer,
which is good enough to hold a 3.5-hour Bollywood movie in H.264 format
at 720x576 resolution, Packman said. The company is working on a 2GB
disk for next year, he said.

In an era when everyone's talking about moving to online media,
physical media still has a commanding presence in sales, Packman said.

About that online media - while streaming to a cell phone isn't likely to become that popular at current speeds, you could just rip the movie to a SD card instead.  After all, those Vmedia discs are tiny and easy to lose.  SD cards are tiny, but they usually just stay in the phone. 

Besides which, although the Bollywood angle is obvious because of the Indian carrier, don't expect U.S. studios to jump into yet another disc format.

This is an idea that seems likely to go nowhere.