Yes, of course, but that's still much cheaper than physical disk distribution.

Is it? Stamping and shipping discs costs very little, the license is the major cost in most cases.

Edit: very old numbers can be found here. https://arstechnica.com/uncategorized/2006/03/6400-2/

How do you know? I’m a highly paid engineer who is oncall on a SAAS, it’s been a wild ride. It’s expensive to keep this crap running. But a DVD burner and fedex? That sounds cheap and simple to me.

They don't even use burners at that scale, they use replicators. Takes seconds to stamp a DVD. Here's a place in California that charges as low as $.075 each per copy, and this is low volume pricing...

http://discreplicator.com/Price.html

There are companies that provide on-demand pricing for just the steaming component (edgecast for example). Then just throw up a DynamoDB table and some simple apis in lambda and you have a pretty cheap (relatively) way to deliver streamed content.

Good point but that’s just MVP; to maintain their competitive edge they have to maintain a lot more features on top of that.

They probably are making a significant profit off it, I'm not saying that's not the case. I'm just saying you can't figure that out by just looking at the marginal cost; you have to look at the investment and ongoing costs and planned payoff period too, which is information you probably don't have available.