There are now a couple of smaller disc-by-mail startups who aim to serve that market. I've signed up with DVDInBox out of Florida and they've done a good job thus far.

From what I've seen their biggest current challenge is their mailer. Netflix spent a lot of time designing their signature red envelopes, working with the USPS on ensuring they would survive a trip through the postal sorting machines. DVDInBox has yet to reproduce it - their envelopes sometimes arrive fairly mangled, or have not arrived at all (lost to the bowels of the machines).