That middle ground is pretty much Amazon with Amazon Prime Video today. Netflix presumably wants to remain an all-you-can-eat subscription service--which has the advantage that I know anything available on Netflix is "free."
Yup, no transaction costs to have to deal with, no thoughts about should you go somewhere else. Netflix is all about one thing. Giving the best video experience they can at the cheapest price. Amazon is all about getting you into the ecosystem. Most of the time they don't have anything compelling.