While not a big Blockbuster fan of old, after the most recent price increase at Netflix I figured I'd give big blue a chance. So far, I'm really happy with it and hope that Canada closing it's stores doesn't really portent the demise of America's stores.
The reasons are manifest. Streaming quality is generally nowhere near as good as Blu-Ray and in many, many cases not as good as DVD. Why spend a ton of money on a home theater setup up to feed it garbage?
I also watch a lot of movies, not so much TV. Netflix, Hulu, etc, all push the heck out of TV shows on their streaming services (Hulu for very obvious reasons, as that is their business model). I don't care what happened on season three of the Office, or the Closer, or the bachelor. I do however like watching films, here physical media has a very large catalog difference compared to legal streaming sources (I'm sure I could find a ton of stuff that is pirated, but I'd personally rather not).
Streaming also adds other fee's beyond the $8 for Netflix subscriptions. I am not a heavy computer user (I don't play online games, I don't send/watch videos via the computer, etc). Normally a basic "high speed" connection is fine for all my usage (something like a 1.5 connection is blazing fast for text based pages/searches/emails). That lower connection speed however created some issues when I tried streaming via Netflix, who was by far the best streaming service I tried. The recommended fix, up my internet speed, which lead to a dramatically higher internet cost (once the "promo's" went away, my bill went from $24,95 to $55.95 plus an additional $8 month for a new modem rental fee).
Add in consideration/concerns about future media costs and availability to streaming sources, and it looks like costs will most likely go up again.
So in the end, streaming was costing me more than my old physical media plan, plus the cost of the physical media plan for a modicum of "convenience" while realizing a lower performance from my home theater in video and sound quality.
I realize that I may very well be swimming against the stream, but I doubt I am the only one here. As such, I think "video stores" and kiosk's such as RedBox fill a pretty big void for people such as myself.