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Or more likely it isn't or Netflix wouldn't be backing away from it even though they already have the infrastructure. I suspect that there's a real squeeze between the current hits (which Red Box covers pretty well and others purchase off Amazon/Walmart/etc.) and the default behavior of watching whatever is on streaming that just doesn't leave a lot of business on the table for the balance.

The problem is that your revenue is capped at $8/mo:

http://www.netflixreview.com/netflix_plans.html

Netflix has already built out great infrastructure for this but clearly didn't find it profitable enough to focus on it. I'd be very hesitant assuming that you've seen a market which they haven't.

Or a startup for peer-to-peer resale of used DVDs?

Though Amazon might've already locked that market up. Why rent when I can buy for $0.01 + $3.99 shipping?