I'm sure streaming is more profitable for them than dealing with physical discs. I'm stoked, if the selection is as good as I hear it is in the US I'll be dropping a lot of my cable channels.
One day in the not-too-distant future, we'll see a headline here "Netflix stops mailing discs to US customers, goes streaming-only." It's (mostly? ideally?) all about the most efficient and user-accepted way to move the bits around.
I remember reading somewhere that the reason they called the company Netflix (and not something like, say, Mailflix) was that the distribution model was always intended to be flexible.
Netflix (like Amazon with books) has a long way to go before all the movies that are available on DVD are also available on streaming. Also Blu-ray customers would be disappointed unless Netflix can stream in 1080p, which is difficult across a high bandwidth wireless network, let alone the Intranet.