OTA updates were delivered through System Preferences for many years before the App Store, not on DVDs.

There's some wires getting crossed here. Sure, minor maintenance releases were delivered this way, but up until 10.7 the only way to upgrade to a new 10.x release (major) was the DVD purchased from Apple*. I have all my purchased boxed OS X releases from 10.0 through 10.6 still sitting on the shelf.

Major OS upgrades weren't free until the release of 10.9. 10.7 was first version you could buy as a download through the App Store.

* 10.1 was an odd release, in that re-sellers got given a limited amount of free upgrade DVDs to hand out, but did eventually retail for 20 bucks IIRC. Regardless, DVD was still the only option.