SAN FRANCISCO (AP) — Netflix is set to shut down the DVD-by-mail rental service that paved the way for its groundbreaking video streaming service, ending an era that began a quarter of a century ago. century when the delivery of records by courier was considered a revolution. concept.
The DVD service, which still offers 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 video streaming service, but it stopped disclosing the number of people still paying for DVD delivery by mail years ago because this part of its business has steadily declined. The DVD service generated $145.7 million in revenue last year, which translates to some 1.1 million to 1.3 million subscribers, based on average prices paid by customers. .
Growth of Netflix’s video streaming service is slowing over the past year, prompting management to place greater emphasis on increasing profits. This focus may also have contributed to the decision to shut down an operation that was becoming a financial drain.
But the DVD service was once Netflix’s biggest moneymaker.
Shortly before Netflix broke video streaming in 2011, the DVD-by-mail service had more than 16 million subscribers. That number steadily declined, and the service’s eventual demise became apparent as the idea of waiting for the U.S. Postal Service to provide entertainment became woefully outdated.
But the DVD-by-mail service still has die-hard fans who keep subscribing because they like finding obscure movies that aren’t widely available on video streaming. Many subscribers are still nostalgic to open their mailbox and see the familiar red and white envelopes waiting for them instead of junk mail and a pile of bills.
“These iconic red envelopes changed the way people watched shows and movies at home — and they paved the way for the shift to streaming,” Netflix co-CEO Ted Sarandos wrote in a post. blog. about the upcoming DVD service shutdown.
The service’s history dates back to 1997 when Netflix co-founder Marc Randolph visited a post office in Santa Cruz, California to send a Patsy Cline compact disc to his friend and co-founder Reed Hasting. Randolph, Netflix’s original CEO, wanted to test if a disc could be delivered through the US Postal Service undamaged, eventually hoping to do the same with the still-new format that became DVD.
Patsy Cline’s CD arrived at Hastings unblemished, prompting the duo in 1998 to launch a DVD rental by mail website that they always knew would be supplanted 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 opposite the Santa Cruz post office where he sent Patsy Cline’s CD. Hastings replaced Randolph as CEO of Netflix a few years after its inception, a job he didn’t give up until stepping down in January..
With just over five months of life remaining, the DVD service has shipped more than 5 billion discs across the United States – the only country in which it has ever operated. Its end 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 when they noticed the shrinking selection in a library that once numbered more than 100,000 titles. Some customers also reported having to wait longer for discs to be delivered, as Netflix closed dozens of DVD distribution centers with the switch to streaming.
“Our goal has always been to provide the best service to our members, but as the business continues to shrink, that’s going to get harder and harder,” Sarandos acknowledged in his blog post.
Netflix renamed the rental service to DVD.com – a prosaic name that was chosen after Hastings floated the idea of calling it Qwikster, an idea that was widely derided. The DVD service operates from a nondescript office in Fremont, Calif., located about 20 miles (32 kilometers) from Netflix’s sleek campus in Los Gatos, Calif.