Online film download stores are a great thing. You no longer need to travel all the way to a shop to buy or rent a plastic disk with the film on it.
The only problem with these services is that the files take forever to download. Those of us who are not lucky enough to live in Japan or Sweden (where
100 mb/s fiber-to-the-home is commonplace) are still condemned to DSL, probably for at least another decade to come. When you need to wait 12 hours for a 2GB film to download, the whole advantage of click-and-watch is negated. You may as well order it on Amazon.
I suggest a new service for this kind of customer: You send an external hard disk to a company (let's say with a capacity of 1 TB). The company fills that hard disk with as many films as they can. Using the latest codecs, a DVD-quality film takes up 2 GB, so there would be space for a catalogue of 500 films. The hard disk is then sent back to you free of charge.
However, the content of the hard disk is custom encrypted. Each film needs to be unlocked with an individual code (individual to each film AND customer). When you want to buy a film, you go to the online store where you purchase the unlocking code. Once entered, the film will be decoded to a normal, DRM-free mpeg file on your hard disk.
The catalogue is chosen according to which films the customer is likely to watch. This will include most new releases and a selection of older films that suit his/her taste. The customer can also compile the catalogue themselves if they want to. The hard disk can be sent back at any time to update the catalogue.
But this is only the beginning. In a few years, when we all own 100 TB hard disks, we could fit the entire Netflix catalogue on one of those, and it would only need to be updated for new releases.
I could imagine the same model working for video rental, but that would make DRM (eeeeew) necessary.