Because the assumption is there’s very little throughput. Storage isn’t really that expensive, but bandwidth is and Backblaze is only cheap if you aren’t trying to get at your data regularly. That’s fine for backups because hopefully you never need them.
EDIT: I should say that for an individual user, getting data out of Backblaze isn’t that expensive, but it’s more expensive than cold storage. I think they charge $.01 per GB transfered, so a 10GB movie would cost you about ten cents to stream. It would cost you $100 to recover a 10TB backup from Backblaze (though for a fee than can mail you some of that on a hard drive, I think).
I actually find the quality of DVDs to be very good with the right equipment. I’ve seen DVDs projected in movie theaters and they look good. There are bad transfers and I’d certainly take a BluRay over a DVD if there’s an option, but overall DVDs are still a solid format that I still use regularly. I’ve never had the urge to actively seek out an update to something I already have on DVD, though I might grab an upgrade if I see a sale or the mood takes me.