The value Netflix provides is primarily convenience. There are other ways to watch movies and TV shows, the reason to use Netflix is that it's more convenient than the alternatives.
Having to deal with physical media (and wait for them to be delivered) is less convenient than other alternatives to Netflix. Therefore, it's a flaw of Netflix.
Streaming is definitely more convenient, but since Netflix's streaming selection is atrocious, it's not worth my time or money.
I'd much rather put up with the minimal hassle and a bit of a wait to get a great selection of DVDs.
The "hassle" amounts to me opening up an envelope, putting the DVD in to my DVD player, putting it back in to the envelope when I'm done and throwing it in to a mailbox on my way to work.
Sure, it's not as easy as hitting play in a streaming app, but not really a big deal, either.
The value Netflix provides is primarily convenience. There are other ways to watch movies and TV shows, the reason to use Netflix is that it's more convenient than the alternatives.
Having to deal with physical media (and wait for them to be delivered) is less convenient than other alternatives to Netflix. Therefore, it's a flaw of Netflix.