Netflix has announced the closure of its original DVD rental business, which has been operating for 25 years. The company will “wind down” DVD rentals (known as DVD.com) due to the diminishing demand for physical rentals, which makes it challenging to maintain the desired quality of service. The final movie discs will be mailed on September 29th.
Netflix’s first steps: A trip down memory lane
Netflix shipped its first disc, Beetlejuice, in 1998, and since then, it has mailed over 5.2 billion movies in its signature envelopes to more than 40 million customers. The company began offering on-demand video streaming in 2007, and it quickly became Netflix’s most popular service by 2009. After a failed attempt to spin off mailed rentals as Qwikster in 2011, Netflix moved them to DVD.com in 2016. By that point, the company had already begun producing original streaming shows and stopped mailing DVDs on Saturdays.
Financial motivations: Cutting costs and growing subscribers
Closing the DVD-by-mail unit could help Netflix reduce costs as it recovers from a challenging 2022, despite its profits in the first quarter still falling short compared to the previous year. The company’s subscriber growth was also relatively modest, with 1.7 million new users joining. The decline in the disc market has been sharp and steady for years, with sales dropping 19 percent from 2021 to 2022, according to VideoScan/MediaPlayNews data.
Netflix played a significant role in revolutionizing the movie rental business. In the 1990s and early 2000s, retailers like Blockbuster dominated the market, but Netflix shifted the landscape by allowing people to rent movies from home. Although competitors like Blockbuster tried to catch up, they struggled to gain traction. Although retail rentals are still available through Redbox kiosks and similar options, it’s clear that Netflix has forever changed the way we consume movies.
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