Netflix didn’t want to talk to me about their movie catalogue, leaving me to rely on the speculation of a couple of video store folks that the company’s DVD selection is shrinking most likely because it is not replacing damaged disks.
People often keep them, from a mix of greed and guilt (still haven't watched that classic film...but I really must...I'l do it next week...). Meantime, piracy has killed the market for new production runs of obscure films, so niche titles go out of print and stay out of print because no distributor wants to spend $10,000 on something that may only have a few hundred buyers.
I personally think the streaming service is great, notwithstanding the spotty coverage. It also makes a great deal more sense as a long-term revenue model than discs. I don't see a way of guaranteeing availability without compulsory licensing, though.