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It’s the end of the Netflix era.
Twenty-five years after the company’s founding, Netflix says it’s killing its longtime DVD-to-mail business. Yes, the red envelopes will be gone soon.
In an FAQ and a blog post on its website, Netflix says it will ship its last DVD on September 29, 2023.
“After 25 years of amazing running, we made the difficult decision to stop at the end of September,” the FAQ says. “Our goal has always been to provide the best service to our members, but as the DVD business continues to shrink, that will become increasingly difficult. Making 2023 our final season allows us to keep our quality of service to the last day and come out on top.”
Years before TV shows or movies were broadcast, Netflix launched with a simple idea: replace the outdated DVD rental experience by delivering DVDs to customers and letting them mail them back when they were done (the first DVD they shipped was a copy of Beetlejuicefor each company). Soon, Netflix red wrappers were everywhere, and Blockbuster, the dominant DVD rental company of the era, was on the brink of collapse.
And while its DVD division has shrunk over the years (it had $146 million in revenue in 2022, $183 million in revenue in 2021, down from $239 million in 2020), the business model forged by Netflix’s DVD efforts has helped in shaping its foundations. a job.
“Our goal has always been to provide the best service to our members, but as the business continues to shrink, that will become increasingly difficult,” Netflix co-CEO Ted Sarandos wrote in the blog post on Tuesday.
It was Netflix’s shift to a subscription model that fueled its growth, and it quickly adopted algorithmic recommendations to help users decide what to rent next. Both the subscription model and its recommendation engine support the live streaming business.
The DVD business was also the subject of one of the most iconic moments in Netflix history: when it said it would spin off its DVD service as a new company called Qwikster, separating its streaming offerings from DVD. Customers revolted, and the DVD service was stuck as part of the main Netflix service (eventually, however, streaming plans and DVD plans diverged).
It turns out that streaming can grow much faster than the DVD business, which relied on legacy infrastructure like warehouses, DVD inventory, and the mail service to operate. And it’s proven to be a game-changer for the way entertainment is consumed, even if some hardcore fans continue to use the DVD service for those hard-to-stream titles.
Ultimately, while the end of the Netflix DVD business is the end of a defining era in entertainment, the writing has been hanging on the wall for years. Netflix hasn’t disclosed how many DVD subscribers it has since 2019 (when it had just over 2.1 million subscribers and had $300 million in revenue), and Sarandos has made it clear the company has no intention of trying to subsidize it. .
“Once your primary role is to try to save a company, you’re dead,” Sarandos said. THRKim Masters in an interview in March 2021. “When we went from DVD to streaming, we didn’t spend a single minute trying to save the DVD business. Our future has always been in the way of streaming, and any effort we put into trying to save the DVD business was energy that wasn’t spent trying Creating a broadcast business.
On his blog, Sarandos reflects on the legacy of creativity.
“We feel proud to have been able to share movie nights with our DVD members for so long, very proud of what our employees have achieved and excited to continue to please entertainment fans for many more decades to come,” he wrote. To everyone who has added a DVD to their queue or waited by the mailbox for a red envelope to arrive: Thank you.
“Beer aficionado. Gamer. Alcohol fanatic. Evil food trailblazer. Avid bacon maven.”