If you subtract the amount of money that people pay Blockbuster in late fees from their revenues then Blockbuster is unprofitable.
Then take Netflix, which is premised on not having the revenues that make Blockbuster profitable but leveraging instead the greater effiencies of web based distribution, and subtract the amount of revenue from people who watch less than a few movies a month then you have a non-viable business model.
Despite the logistical and technical efficiencies of online businesses, I wonder if many are paradoxically based upon the inherent inefficiency and laziness of people.
(People like me, who have had the same 3 movies out on Netflix for 2 months now.)