It’s not so much a question of competing with Netflix as it is a question of surviving with Netflix’s subscription based model. The studios are against subscription based streaming rentals, so all you will ever see on this type service is 3rd-tier movies and old TV shows. There’s a credible argument that Netflix’s streaming model is not sustainable without a disc-rental component to support it.
But a reasonably priced per-view streaming rental service is already working for several companies, and this is likely what Charlie is looking at and talking about. Even a per-title disc rental model is not out of the question.
Netflix is not a competitor in streaming rentals of new release or even 2nd tier movies.