Netflix Officially Ending The Service That Built The Company
Netflix will stop sending DVDs this Fall.
These days, Netflix is the juggernaut of the streaming wars, beginning its streaming service in 2007 and growing its subscriber base to 230 million over the next 16 years. But that’s not what first made it popular – the company started as a DVD-by-mail subscription service that let you rent practically any movie in existence without the threat of late fees (something its erstwhile competitor, Blockbuster Video, was infamous for). Now, more than 25 years after they sent out their first DVD (Beetlejuice starring Winona Ryder, which was sent out in March 1998), Deadline reports that Netflix’s DVD rental service will shut down in the fall.
Netflix will stop billing its DVD subscribers after August and will send discs out up until September 29, 2023, at which point the service will be discontinued. All DVDs must be returned by October 27. It’s unclear whether failing to return your DVD on time will result in a late fee.
The introduction of Netflix’s DVD service completely disrupted the video rental industry, which at the time was dominated by Blockbuster Video. Netflix, alongside the automated Redbox rental kiosks, played a role in the company’s decline. Blockbuster had 9,094 stores in the U.S., which was reduced to 1,700 in 2010, and just one open today.
Famously, Netflix had financial issues early on, and it tried to sell its DVD-by-mail business to Blockbuster in 2000. Blockbuster chose not to accept Netflix’s $50 million selling price, forcing the fledgling company to make it on its own. And make it they did, growing into a company with an almost $150 billion valuation.
The way Netflix’s DVD rental service worked (and still works, for the moment) is fairly elegant. Subscribers choose from a list of all its titles (which totaled 100,000 at its peak), add them to a queue, and wait. A red envelope containing your queue’s first two DVDs would arrive in the mail, which you were allowed to watch at your leisure before you returned them — prompting the service to automatically send the next two DVDs.
Unfortunately, Netflix’s current DVD service (which now goes by the name of DVD.com) is a mere shadow of its former self. Its titles number in the single-digit thousands, and only about 1.2 million subscribers receive DVDs — making up about half of a percent of the company’s total subscriber base.
It was, perhaps, inevitable that Netflix would shut down its DVD service. The entire DVD and Blu-Ray rental industry has almost collapsed, with Redbox being the only survivor. Technology marches on, and with competitors like Hulu, Amazon Prime, and Disney+ gaining market share, it comes as no surprise that even the combined sales of DVDs and Blu-Rays don’t come close to reaching the number of streaming subscriptions.
Of course, things may change in the future. Most streaming services have not yet turned profitable, with many starting to slow down their investment in original content to slow the financial bleeding. However, Netflix still makes a profit, meaning it’s likely to remain king of streaming for the foreseeable future.
