I'm pretty sure that he's saying that it's not just using a compression format (MPEG 2), but also using significant compression. I don't know who's right here, and don't particularly care, but I Versapak clearly understands EXACTLY Lucindrea and RayB are saying. Maybe he's wrong, though it doesn't sound like it, and the movie studios are using MPEG 2, but not compressing anything. But it sounds like he knows exactly what they are saying and is disagreeing.
He's saying that the studios don't just use MPEG 2 -- they use it to COMPRESS the video. In fact, he specifically said that without compression the video would be over a hundred gigs. If this statement is true, then clearly there is some compression going on.