Go for it Beeb!
It's mindboggling why they haven't done this already. The BBC's back catalog alone would make much more compelling viewing than 99% of the shite on NOW TV, Netflix etc. It's the only service I'd even consider paying a monthly fee for.
The "Digital DVD" bit worries me. This doesn't strike me as silly old Auntie Beeb employing an anachronistic term. I think they may simply try exactly that - charging DVD prices for individual items rather than a Netflix type library subscription. In which case it will die on its arse.