Blockbuster at that price isn't a great example. Redbox Blu-rays are $2.12. I live in an area with a relatively low population density and there are three Redbox machines within short driving distance. Each with a solid selection of new releases (Aquaman, Glass, The Mule, Into the Spider-verse, Green Book et al.). Redbox has ~34,000 locations.
Netflix disks are a better comp. They cost the same as streaming does and while the selection is far better, the limited capacity is far worse for most people.
The real competition will probably end up being piracy, eventually. Netflix streaming is getting worse content. And if this decline continues, piracy will become much more favorable.
So at some point I decided that a subscription service with almost everything I was interested in would socialize things appropriately and reduce the transaction costs so that piracy and this anarchic tendency wouldn't be worthwhile. After a few years of using the service, I feel that it is only a moderate convenience. In the end my watching habits haven't changed. I am saving some time downloading random things from random horrible websites. But the selection is horrific. There is no way to actively decide to watch something. There are just a handful of options. There are no classics. It's worse than the selection on an international flight. And it's getting expensive.
That's where I'll have to stop you, as its still a very cheap service comparatively.
I worked at Blockbuster toward the end of their run, it was about $4-7 dollars for a single rental.
Current streaming rentals on Amazon range from $4-8 as well.
Netflix, streaming only, is currently $13 per month.
The only alternative I think is very good is HBO, which is $15 per month. They usually have before-cable-run-but-after-initial-rental-period movies. And they have a handful of stellar TV shows. We still struggle to find something to watch on that service.