It turns out he was wrong. A Netflix search showed that the movie was only available via mail-in DVD, not Instant Watch. I joked that I was impatient and didn't want to wait a couple of days for a DVD to be mailed.
"Not a problem" he said; my friend just hopped onto Usenet and downloaded a Blu-ray copy of the film in about 45-50 minutes, in about the time it took to cook some BBQ for the both of us.
My argument is not about the legality of this scenario; it's that rather decentralized, open networks are doing a better job at distributing high quality content than the very corporations producing and selling this content. Considering that you have to pay anywhere from $10 - $20 a month for Usenet access, people buy into this service not because they want "free" movies/music, they're paying for the ability to download virtually any movie/album they want... at any time they please. It's like Netflix Instant Watch on steroids, at a more affordable price.