The big thing that keeps me from going streaming-only on Netflix is the selection. Of the 178 movies currently in my queue, only 68 are available to stream. Licensing, I know. There's a good piece on the recent purge here, calling Netflix out on some of their spin, which included worrisome language about Netflix becoming an "expert programmer". As in, "rather than let you see whatever you want, we'll decide what you want to see." Ugh.
Here's what I don't get: Netflix already makes their vast DVD collection available to me via the postal service. They have a particular copy of the movie, and they mail it to me. Nobody else can watch that copy because I have it. They haven't copied the DVD to allow multiple people to watch it at once, so no foul there. So why not just do exactly that, without the technicality of shipping it to me? It seems, from my layperson perspective, like the Cablevision and Aereo decisions are a great precedent:
Aereo's technology is designed to take advantage of a landmark 2008 ruling by the Second Circuit, based in New York. It held that a "remote DVR" service designed by Cablevision was legal because it kept a separate copy of a program for each user who recorded it. Reasoning that the same principle should apply to broadcast television, Aereo built a television streaming service with thousands of tiny antennas. Aereo claims that because it assigns each active user an individual antenna, and stores separate copies of recorded programs, it isn't infringing copyright holders' public performance rights.
What if Netflix, instead of mailing me the DVD, stuck it in a DVD player I was renting from them, and streamed it to me? Seems pretty comparable. From there, it just seems silly to do it with plastic discs, so you digitize the disc and throw away the original (so they still just have the one copy that can only be watched by one subscriber at a time). And instead of me renting an actual physical DVD player that lives at Netflix, I rent a virtual player that lives on the Netflix server farm (or is an Amazon EC2 instance). So I fire up the Netflix app, look through my queue for all the movies that are currently available (at least one copy not currently being watched), and select it. Netflix moves that copy from the pool to my virtual player, and starts streaming it to me. Nobody else can watch that copy while I'm watching it. When I'm done (or if I stop it for some length of time), that copy goes back to the pool so somebody else can watch it.
Just like the DVD service, but without the postal lag, and without the plastic discs (well, Netflix still buys the DVDs to produce the pool of legit copies, but no plastic discs are mailed to subscribers).
Update: Oh, bummer, a couple years ago Zediva tried this and was sued out of existence. Netflix has deeper pockets, and the Aereo decision is recent (but Zediva decision is much more directly applicable), but still, given they probably don't want to torpedo their existing streaming deals, and given their language around "expert programming", I will not be holding my breath for Netflix to pick this battle. (thanks to Mark for the link)
So, keep that postal plastic coming!