As I am aware, NetFlix used to be only 'dvd rental from home'. That was their thing. Then at one point they introduced a service for subscribers, where they could watch certain movies instantly from their computer. The service was a free bonus for current subscribers of their 'dvd rental from home'.
Then that changed, time has flipped things around and now the main service for NetFlix is the instant streaming for $8 a month, and 'dvd rental from home' is a secondary feature for an additional $2 a month.
It is difficult to speculate what 'should be' based on that churn. If anything can be argued most successfully it might be that since the 'dvd rental from home' is an add-on feature it has to be offered through the iOS app. Though since it is only $2 that would suck. When you search in the iOS app for a movie that isn't offered through the streaming service, you get a search result back that says 'disc only', so that can be argued as a form of advertising for the extra service. Netflix would have to remove all references to their add-on service from the iOS app, when you search for a move that isn't available through the service it would have to simply say 'not available' and leave it at that.
let's see what happens to iOS if Netflix blocks instant streaming to all iOS devices because apple wants more money.