How is this eroding privacy? Of course they monitor the network traffic of users who use their systems - that just makes sense. Now, if they are tracking individual information such as how many movies I myself am viewing, that's different. I'm betting that they are just tracking how much and what by how many users, and not too much user specific data, other than what they would be required to by law or license agreements. Just my thoughts, of course.
I'm with you - I don't watch any video on the Xbox 360, either, so someone else is making up for "my" 30 hours, too. I don't like the fact that I have to pay Microsoft to access one of their partner sites when I can access many of them for free through my PS3, so I just do it that way.