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Add to this market forces, with, as Daniel points out, the reduced costs of production and distribution, and competition. Price will be forced down over time and they can naturally be lower than physically renting a disc.
I also see the rental of older movies increasing, as Blockbuster-style rental outlets only have the latest blockbusters on the shelves. The ability to watch an old film for $1.99 (99p) is appealing and gives the studios another income stream from partially-redundant properties.
I myself would love to be able to get first-run movies at home on the day they open in the theaters. We already pay $40 for the four of us to go to the theater (plus the cost of food), so $40 for the opportunity to stay comfortable in our home theater and see these movies would be great!! We could even do it during dinner, a la cinema 'n' drafthouses.
Bring it on . . .