Earlier quoted context omitted.
What's nice about mailing physical media is that the movie studios don't have much control. You can buy a widget and do whatever you want with it, including mailing it around. You can't do this on the Internet, though, because computers are magical and Someone Could Copy It!1111!!
you would think they would catch on that physical media is easily copyable where the instant downloads aren't so why not do instant for everything first then DVD.
They view Netflix as more of an analogue to the "TV Syndication" stage of a property's life. Until Netflix has a 'premium' club paying more for early access to new material (so that Netflix can pay more in streaming license fees), they'll continue to see it as such.