[Paperweight]

I'd say the unit cost of running a proper streaming-rental service is about the same as burning a copy of a DVD (20 cents per movie). There's way more to it than just bandwidth.

Sure you could still pirate (just like you could copy DVDs) but if the path of least resistance (factoring in quality, legal and moral costs) is to just rent it legitimately then that's what people would do. Video stores could have just copied DVDs and the studios were very afraid of DVD-Rs when they came out, but that didn't pan out because it's obviously illegal and immoral.

There was a company in California in the early days that had actual people putting actual DVDs into actual DVD players that would stream on demand across the internet, but they folded when they got a legal threat. It might be legally OK - I don't think it's ever been tested in court.