A quarter-century ago, sending discs through the mail was a novel idea, but now Netflix is about to cease the DVD-by-mail rental business that served as the foundation for its ground-breaking video streaming service.
On September 29, the DVD service will mail its final discs; it still sends movies and TV series in the red-and-white envelopes that were originally Netflix’s logo.
Nearly 231 million people globally subscribed to Netflix’s video streaming service at the end of last year, but the company ceased revealing how many customers still pay for DVD delivery by mail years ago as that area of its business slowly declined.
Last year, the DVD service made $145.7 million in income, equivalent to 1.1 million to 1.3 million DVD rentals.
The DVD-by-mail business had over 16 million customers just before Netflix withdrew from video streaming in 2011.
That number has progressively decreased, and as the notion of waiting for the U.S. spread, it became clear that the service would eventually fail. The Postal Service is now horribly out of date for sending entertainment.
However, there are still ardent subscribers to the DVD-by-mail service who relish discovering niche films that aren’t frequently offered on streaming video. Many customers still experience pangs of nostalgia when they open their mailbox to find the recognizable red-and-white envelopes within rather than junk mail and a mountain of bills.
“Those iconic red envelopes changed how people watched shows and movies at home — and they paved the way for the shift to streaming,” Netflix claims.
The service’s beginnings may be traced back to 1997, when Reed Hasting, a friend and fellow co-founder of Netflix, and Marc Randolph visited a post office in Santa Cruz, California, to mail a Patsy Cline compact CD.
The first CEO of Netflix, Randolph, wanted to see if a DVD could be sent through the US. hope someday to achieve the same feat with the still-emerging format that gave rise to the DVD.
Hastings and his partner launched a DVD-by-mail rental service in 1998 after the Patsy Cline CD arrived at his house undamaged. They always anticipated that this technology will be replaced by something even more practical.
Hastings took over as Netflix’s CEO a few years after Randolph left, a position he held until resigning in January. “It was planned obsolescence, but we bet that it would take longer for it to happen than most people thought at the time,” Randolph said in an interview with The Associated Press last year across the street from the Santa Cruz post office where he mailed the Patsy Cline CD.
The DVD service has transported more than 5 billion DVDs throughout the U.S., the only country it has functioned, with just a little more than five months left in its existence. Its conclusion is reminiscent to the closure of hundreds of Blockbuster video rental locations due to their inability to mitigate the danger posed by online video rentals.
Even devoted DVD users could foresee the service’s demise as they observed the library’s declining collection of what had once been more than 100,000 titles.
With the switch to streaming, Netflix eliminated dozens of DVD distribution locations, which led to some customers reporting increased wait times for disc deliveries.
“Our goal has always been to provide the best service for our members, but as the business continues to shrink that’s going to become increasingly difficult,” Sarandos said in his blog post.