Many younger individuals can't seem to get the concept that paying over and over for "borrowing" something is a bad deal.
We're talking about movies here, not music. I don't know about you, but there aren't very many movies I really care to watch over and over again. This is the whole reason that video rental stores (like the ill-fated Blockbuster) were such a success as soon as VCRs became commonplace; most of us just want to pay a fee and watch a movie *once*, and that's it. Once in a while we'll see a movie that's so great we might want to watch it multiple times (like Aliens from 1986), but that's rare, and even there it's not like I want to watch it that often.
Music is entirely different, and I agree with you on that: I really don't understand the current phenomenon where so many people want to pay for streaming music access, and my best guess is that it's mostly people who don't care that much about music and just want some crappy filler playing in the background all the time. Personally I have very specific music I want to listen to, so I keep it in Ogg form on all my devices (phone, laptop, car) and play from my library constantly. But I listen to music a fair amount: pretty much any time I'm in the car, for instance, plus frequently when I'm using my computer at home, plus frequently when I'm at work (with headphones). I don't watch movies that often, and it just isn't very often that I re-watch a movie.
Oh, and what if you wish to watch something that's older than last year? (Oblivion, Edge of Tomorrow, Pacific Rim) or even within the last year (Star Wars 7) These are all available to me, to watch any time.
Right, and how much did all those cost you? How many dozens of movies do you have to make a decent collection so you aren't watching the same 3 movies over and over? The total cost there is significant. With Netflix, you pay a cheap monthly fee (less than $10) and can watch all you want at any time, out of a truly enormous catalog. If you really like a particular movie a lot and want the higher quality (and lack of worries about problems with access) that a physical disc offers, you can certainly buy that too; it's not either-or.