I found it interesting that there is a section of the US Copyright law that would allow me to create such a service as long as I physically have the dvd and do not alter it in any way.
Somebody already tried that, got sued and had to stop.

You seem to make it look like easy peesy herp derp omg lol rofl muahaha i am gonna be a media mogul superstar.

There is also a difference between regular store purchased dvds (not for rent) and rental versions (much more expensive).
http://www.homemediamagazine.com/streaming/judge-halts-zediva-movie-streaming-24660