News: The End of an Era: Netflix pulls the plug on DVD business


The End of an Era: Netflix pulls the plug on DVD business

Netflix steered customers away from its DVD-by-mail service and towards streaming, resulting in a steady decline in revenue for the former.
The End of an Era: Netflix pulls the plug on DVD business

Netflix, which started as a company that shipped DVDs by mail, has announced the closure of its DVD business.

The firm which said it would ship its final discs from on September 29 surprised its viewers with the announcement on Tuesday ahead of its first-quarter 2023 earnings report

“After an incredible 25-year run, we’ve decided to wind down later this year,” Sarandos wrote in a blog post on the company’s site. “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. So we want to go out on a high, and will be shipping our final discs on September 29, 2023,” Netflix said in a blog post.

The company acquired the domain in March 2012, which was just a few months after it reversed an ill-conceived plan to spin off its DVDs by mail business into a separate entity called Qwikster. Netflix says the first DVD it ever shipped was a copy of Beetlejuice on March 10, 1998, and that it has shipped more than 5.2 billion DVDs in total. The most popular movie? The Blind Side.

Netflix’s revenue from the DVD-by-mail business has, by design, steadily declined over the years, as the company wanted to push members toward the streaming service. In 2022, the DVD business generated $145.7 million (down 20% from the year prior), which represented just 0.5% of its total revenue.

“From the beginning, our members loved the choice and control that direct-to-consumer entertainment offered: the wide variety of titles and the ability to binge-watch entire series,” Co-CEO Ted Sarandos wrote. DVDs also led to Netflix’s first foray into original programming, with Red Envelope Entertainment titles including “Sherrybaby” and “Zach Galifianakis Live at the Purple Onion.”

Netflix first launched video streaming in 2007, and originally that was part of its DVD-by-mail subscription plans. In 2011, Netflix made the disastrous decision to split Netflix streaming from the newly named Qwikster DVD-by-mail business—a move the company reversed after less than a month and following a slew of cancellations.

Sarandos, before joining Netflix in 2000 as head of content operations, oversaw product and merchandising for home video-rental chain Video City/West Coast Video.

“We feel so privileged to have been able to share movie nights with our DVD members for so long, so proud of what our employees achieved, and excited to continue pleasing entertainment fans for many more decades to come,” said Sarandos. “To everyone who ever added a DVD to their queue or waited by the mailbox for a red envelope to arrive: thank you.”

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Topics: Technology, #BusinessTransformation

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