Netflix is preparing to shut down the DVD-by-mail rental service that laid the groundwork for its trailblazing video streaming service, bringing an end to an era that began 25 years ago when sending discs through the mail was considered revolutionary.
The DVD service, which still sends out movies and TV shows in the red-and-white envelopes that were once Netflix’s logo, plans to send out its final discs on Sept. 29.
Netflix had nearly 231 million worldwide subscribers to its video streaming service at the end of last year, but it stopped disclosing how many people still pay for DVD-by-mail delivery years ago as that part of its business shrank steadily.
Last year, the DVD service generated $145.7 million in revenue, which translates to between 1.1 million and 1.3 million subscribers based on average customer prices.
The DVD-by-mail service had more than 16 million subscribers shortly before Netflix separated it from video streaming in 2011. That number has steadily declined, and the service’s demise became obvious as the concept of waiting for the United States Postal Service to deliver entertainment became woefully outdated.
However, the DVD-by-mail service still has devoted followers who subscribe because they enjoy discovering obscure films that aren’t widely available on video streaming. Many subscribers still get nostalgic when they open their mailbox and see familiar red-and-white envelopes instead of junk mail and a stack of bills.
“Those iconic red envelopes changed the way people watched shows and movies at home — and they paved the way for the shift to streaming,” said Netflix co-CEO Ted Sarandos in a blog post about the DVD service’s impending demise.
Netflix co-founder Marc Randolph went to a post office in Santa Cruz, California, in 1997 to mail a Patsy Cline compact disc to his friend and fellow co-founder Reed Hastings. Randolph, Netflix’s first CEO, wanted to see if a disc could be delivered through the US Postal Service without being damaged, with the hope of eventually doing the same with the still-new DVD format.
The Patsy Cline CD arrived undamaged at Hastings’ house, prompting the duo to launch a DVD-by-mail rental website in 1998, knowing full well that it 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 last year in an interview across the street from the Santa Cruz post office where he mailed the Patsy Cline CD. Hastings succeeded Randolph as CEO of Netflix a few years after its inception, a position he held until his retirement in January.
With just over five months to go, the DVD service has shipped more than 5 billion discs across the United States — the only country in which it has ever operated.
Its ending is reminiscent of the thousands of Blockbuster video rental stores that closed because they couldn’t compete with Netflix’s DVD-by-mail service.
Even subscribers who have remained loyal to the DVD service may have seen the end coming as they noticed the shrinking selection in a library that once housed over 100,000 titles. Some customers have also complained about having to wait longer for discs to be delivered because Netflix closed dozens of DVD distribution centers as part of the transition to streaming.
“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 admitted in his blog post.
Netflix rebranded the rental service as DVD.com, a mundane name chosen after Hastings floated the idea of calling it Qwikster, which was widely mocked. The DVD service has been operating from a plain office in Fremont, California, about 20 miles from Netflix’s gleaming campus in Los Gatos.
