SAN FRANCISCO — Netflix is about to shut down the DVD mail-in rental service that laid the foundation for its groundbreaking video streaming service, ending an era that began a quarter-century ago when disc mail delivery became considered a revolutionary concept.
The DVD service, which still delivers movies and TV shows in the red and white envelopes that once served as Netflix’s emblem, plans to ship its final discs on September 29.
Netflix ended March with 232.5 million subscribers worldwide to its streaming video service, but stopped disclosing how many people still pay for DVD delivery by mail years ago as that part of its business shrank steadily. . The DVD service generated $145.7 million in revenue last year, which translated to about 1.1 million and 1.3 million subscribers, based on average prices paid by customers.
The growth of Netflix’s video streaming service it’s been slowing down over the past year, leading management to place more emphasis on growing profits. That approach may also have contributed to the decision to close a deal that was turning into a financial drain.
But the DVD service was once Netflix’s biggest money maker.
Shortly before Netflix abandoned video streaming in 2011, the DVD-by-mail service boasted more than 16 million subscribers. That number has steadily dwindled, and the eventual demise of the service became apparent when the idea of waiting for the US Postal Service to deliver entertainment became woefully outdated.
But the DVD by mail service still has diehard fans who continue to subscribe because they value finding dark movies that aren’t widely available on streaming video. Many subscribers still get nostalgic opening their mailbox to see the familiar red and white envelopes waiting for them instead of junk mail and a stack of bills.
“Those iconic red envelopes changed the way people watched shows and movies at home, and paved the way for the shift to streaming,” Netflix co-CEO Ted Sarandos said. wrote in a blog post about the upcoming shutdown of the DVD service.
The service’s history dates back to 1997, when Netflix co-founder Marc Randolph went to a post office in Santa Cruz, California, to send a Patsy Cline CD to his friend and co-founder Reed Hastings. Randolph, the original CEO of Netflix, wanted to test whether a disc could be delivered through the US Postal Service without being damaged, hoping to do the same for the still new format that became DVD.
The Patsy Cline CD arrived flawlessly at the Hastings home, prompting the duo to launch a mail-order DVD rental website in 1998 that they always knew would be superseded by even more convenient technology.
“It was planned obsolescence, but our bet was that it would take longer than most people thought at the time,” Randolph said in an interview with The Associated Press last year, outside the Santa Cruz post office. , where he mailed the Patsy Cline CD. Hastings replaced Randolph as Netflix’s chief executive a few years after its inception, a job he didn’t quit. until leaving office in January.
With just over five months to live, the DVD service has shipped more than 5 billion discs in the US, the only country in which it has operated. Its ending echoes the downfall of the thousands of Blockbuster video rental stores that closed because they couldn’t counter the threat posed by Netflix’s DVD-by-mail alternative.
Even subscribers who remain loyal to the DVD service could see the end coming as they notice the dwindling selection in a library that once numbered more than 100,000 titles. Some customers also reported that they had to wait longer for discs to be delivered, as Netflix closed dozens of DVD distribution centers with the move to streaming.
“Our goal has always been to provide the best service to our members, but as business continues to shrink, that will become increasingly difficult,” Sarandos acknowledged on his blog.
Netflix changed the name of the rental service to DVD.com, a prosaic name that was decided upon after Hastings floated the idea of calling it Qwikster, an idea that was widely ridiculed. The DVD service has been operating out of a nondescript office in Fremont, California, located about 20 miles (32 kilometers) from Netflix’s swanky campus in Los Gatos, California.