As a result, physical DVD's must be repurchased by Netflix over and over, if they are a popular rental item. This represents a measurable revenue stream for the film industry, and they are probably quite happy with it.
Streaming movies don't incur this damage and don't generate the same revenue stream for DVD sales.
I'd be curious to see some statistics from Netflix, telling how many times they are able to rent out a disc before it comes back unplayable. I know I've had a fair few unplayable discs shipped to me by Netflix.