Yes physical DVDs are much more expensive than bits to get to my house. That isn't really surprising is it? Now consider the licensing fees. Netflix can buy a DVD from Walmart for $16 and send it to 100s of people at year. They don't need to give the movie industry any more money than their share of that $16. Yes Neflix has to buy 10,000 copies, but still we are only talking $160,000 of money up front to distribute the movie. Now what to take a guess how much Netflix pays to license a movie for streaming? Guess what, it is more than $160,000. A lot more. Like 100 TIMES more. The postage is still cheaper.