Lots more logistics involved with physical compared to streaming. Time is zero sum, you they could of had a small profit off the 1 million users but they probably found the focusing on other lines of business would be more profitable or less of a hassle.
you're not wrong, but it's just crazy to me. They could've decided to do just 4K UHD Blu-Rays and charged $30 a month. There are niche's to be found. Like you said the opportunity cost is huge and so here we are.
From an outsiders perspective it's just incredible, though.