DVDs are still pretty popular. We sell them and run paysites. Of course we sell Japanese content on DVD. It may be a slightly different market.
Downside is DVDs are the popular format for rippers to grab content. It has been noted elsewhere that besides site rips, most stolen content is taken from dvd.
That said, we are having a massive sale at low, low prices! DVD shop,
www.juicybunny-dvd.com/store 
If I were starting out now, paysite in some form, only.