Why did illegal downloads outstrip legal ones by two to one if what you assert is true?
Possibly because the majority of legal downloads are overpriced for what they are. Last time i looked on Xbox Live/PSN's video marketplace i think an episode of The Walking Dead was £1.99 just to rent
, now that would be an acceptable price to pay if you could actually keep the episode because the price of the full season at £1.99 per episode would work out to something similar to buying a DVD/Blu Ray boxset, but when it's only to rent i'm sure you can agree that it's a bit overpriced.
As well as this, legal download stores often have restrictive DRM that only allows you to watch things on certain machines (e.g. iTunes wont let me transfer something to my PS3 to watch in comfort on my TV, instead forcing me to have to watch it on my computer or iPhone).
Once legal downloads start being more realistic with their pricing when compared to physical media and tone down their DRM restrictions i can see legal download options becoming more popular, but until then legal downloads will continue to pale in comparison to the illegal option.