Netflix has made an announcement that may be unexpected for some who believed it had already happened. They have disclosed that their DVD.com service will be terminated later this year, leading to the extinction of the iconic red envelopes delivered to your mailbox. The company's final shipment of discs will take place on September 29th, 2023, marking the end of a 25-year era.
Netflix CEO Ted Sarandos stated in a release on Tuesday that their objective has always been to offer exceptional service to their members. However, as the business continues to diminish, achieving this goal will become more challenging. Therefore, they aspire to leave on a positive note.
According to the statement, members have always appreciated the freedom and flexibility that comes with direct-to-consumer entertainment. They enjoy the vast selection of titles and the option to binge-watch the entire series. Additionally, the introduction of DVDs paved the way for the company's initial ventures into original programmings, such as the production of Sherrybaby and Zach Galifianakis Live at the Purple Onion through Red Envelope Entertainment.
On March 10th, 1998, Netflix dispatched Tim Burton's Beetlejuice as their inaugural DVD. Over the years, they have sent out more than 5.2 billion discs, with The Blind Side, a sports drama featuring Sandra Bullock, being the most frequently delivered. For cinephiles who continue to use the service, this announcement is disheartening since Netflix's assortment of physical discs comprises numerous obscure movies and television programs that may never make it onto the streaming platform.
Remember that Netflix's video streaming service had 232.5 million global subscribers at the end of March. However, the company ceased disclosing the number of individuals who still pay for DVD-by-mail delivery several years ago, as that aspect of its operations gradually declined.
Last year, the revenue generated by the DVD service was $145.7 million. This amount corresponds to a range of 1.1 million to 1.3 million subscribers, depending on the average prices paid by customers.
Over the last year, the expansion of Netflix's video streaming service has decelerated, leading management to prioritize profit growth. This emphasis could have played a role in the determination to shut down an unprofitable operation. Netflix's most profitable venture used to be its DVD service.
In 2011, Netflix separated its video streaming service from its DVD-by-mail service, which had over 16 million subscribers at the time. However, the number of subscribers has since decreased steadily, and it became clear that relying on the U.S. Postal Service to deliver entertainment was no longer a viable option. As a result, the demise of the DVD-by-mail service was inevitable.
In 1997, Netflix co-founder Marc Randolph visited a post office in Santa Cruz, California, to send a Patsy Cline CD to his friend and fellow co-founder Reed Hastings. As the original CEO of Netflix, Randolph's goal was to experiment with whether a disc could survive the delivery process through the U.S. Postal Service without any damage. He hoped to apply this knowledge to the emerging DVD format in the future.
Upon receiving the Patsy Cline CD in pristine condition, Hastings and Randolph saw an opportunity to launch a DVD-by-mail rental website in 1998. However, they always knew that this technology would eventually be replaced by something even more convenient.
"We planned for it to become outdated, but we were confident that it would take longer than most people anticipated," Randolph stated in an interview with The Associated Press last year. Hastings eventually succeeded Randolph as Netflix's CEO a few years after its launch, a position he held until stepping down in January. They reminisced about their beginnings across the street from the Santa Cruz post office where the Patsy Cline CD was mailed.
In just over five months, the DVD service managed to ship more than 5 billion discs across the United States, its sole operating country. Its demise mirrors the downfall of thousands of Blockbuster video rental stores that could not compete with Netflix's DVD-by-mail alternative.
Even devoted DVD service subscribers could anticipate its conclusion, as they observed a reduction in the once-extensive library of over 100,000 titles. Additionally, some customers experienced longer delivery times as Netflix closed numerous DVD distribution centres in favour of streaming.
Netflix has undergone significant business changes, such as discontinuing its DVD service and adjusting prices in different markets. Additionally, they have introduced an ad-supported subscription option to stay competitive with other streaming services and implemented measures to prevent password sharing between households. While not as alluring as physical discs, these changes are crucial for the company's success.