I would avoid expensive up-front physical delivery if possible. If you hire a virtual server from Daily.co.uk it's going to cost about £360 per year with unlimited download bandwidth, or about £800 for a dedicated server.
If you produce 720p MP4 videos, they average out at about 50 Mb per minute or less (probably less with a lot of static screen stuff) in my experience. You could get many many hours of mp4s onto a standard DVD, let alone a dual layer. So I would suggest the Web option, but also the ability to ask you for a DVD - in which case you write it yourself. You can get pretty blanks printed very cheaply. If the volume increases past the sanity point you either go to production DVD printing or offer some hourly-paid employment to a needy student to do the copying runs.
Our Language Lab software is cheap in terms of global prices for that kind of software, but astronomically expensive in AppGameKit games terms. But we do not have production installer CDs. If asked, we will make one, but generally people now prefer downloadable software.
My company produced two award-winning board games (check out Fagin's Gang and Ice Flow on Boardgamegeek.com). We over-printed the numbers because the price-breaks look really good when you get up to (say) 5,000. But then there's warehousing, and distributors rip you off. Hint - do not produce board games.
Good luck!
-- Jim - When is there going to be a release?