Maybe he's talking about the physical medium, and not the movie - a copy of the movie should be distributed, for sure, but the film (and the vhs tape) should be kept locked away, it's a piece of history.
All original copies of all films should be properly archived. I agree with that. The fact that so many have been "lost" is why I don't think we should put our faith in these companies to be the archivists for these works.
Call me a dreamer, but he should just make a good capture of the VHS and upload it to the Internet Archive.