Netflix will end its DVD service, 5.2 billion discs later

Call your Luddite loved ones and nostalgic friends who still cherish physical media. After 25 years, Netflix is ​​ending its DVD-by-mail business.

Before shaking up the entertainment industry and ushering in the age of streaming, Netflix was a company whose business model revolved around mailing DVDs in easily recognizable red and white envelopes. At its peak in 2010, around 20 million people subscribed to the DVD service. But the practice has long seemed anachronistic, and the company said on Tuesday it would ship its final DVDs to customers on September 29.

How many customers? Netflix no longer details these figures. But whoever they are, it’s time for them to dust off any DVDs they might have and send their red envelopes back to Los Gatos, Calif., where they can be taken to the landfills for good.

“These iconic red envelopes changed the way people watched shows and movies at home — and they paved the way for the shift to streaming,” company co-CEO Ted Sarandos said in a statement. letter. “To anyone who’s ever added a DVD to their queue or waited by the mailbox for a red envelope to arrive: thank you.”

The letter also mentioned some trivia about the DVDs. “Beetlejuice,” starring Michael Keaton and Geena Davis, was the company’s first DVD shipment, in March 1998. The most requested movie was feel-good movie “The Blind Side,” starring Sandra Bullock. And the company has shipped over 5.2 billion DVDs over the years.

The DVD announcement was part of Netflix’s first-quarter earnings report, which illustrates how mainstream streaming has become for the company. Writing a strong fourth quarter, with 7.7 million additional subscribers, Netflix said revenue rose 4% year-on-year to $8.1 billion and profit reached 1. $3 billion.

The company also said its average paid memberships increased 4% from a year ago and added 1.75 million subscribers. Netflix’s subscriber base now stands at 232.5 million worldwide.

But Netflix narrowly missed its revenue forecast for the quarter and fell short of Wall Street expectations for new subscribers, leaving analysts concerned that it has yet to rebound from its price correction. last year.

The company faces serious headwinds, including a possible writers’ strike, increased streaming competition and a booming live business, which faltered over the weekend when technical difficulties delayed the release. Netflix’s highly publicized “Love Is Blind” reunion show.

The first-quarter results “leave open questions about the company’s ability to reinvigorate its business with a level of advertising and a paid password-sharing program,” said Paul Verna, principal analyst at Insider Intelligence.

Verna added that Netflix’s revenue outlook for the second quarter was also lower than investors expected. “These are worrying signs for a company that, despite still being a market leader, is struggling to regain its mojo,” he said.

Mr Sarandos played down any disappointment, calling the quarter – the first in which Greg Peters was also co-chief executive – “a status quo quarter for us”.

Mr Peters acknowledged the problems with the live broadcast of ‘Love Is Blind’. “We have not reached the standard we expect of ourselves to serve our members,” he said.

While revealing few details, Netflix said it was happy with the performance of its new tier of advertising, which offers monthly subscriptions for as low as $6.99, and that it had seen little evidence that people were switching from its standard and premium plans to its cheaper ad-supported plan.

The company also said its attempts to crack down on password sharing in four markets — Portugal, Spain, New Zealand and Canada — were going well. In Canada, the company said, its base of paying members is now larger than before the crackdown and revenue growth is now faster than in the United States.

The company intends to expand the crackdown more broadly, including in the United States, in the current quarter.

Netflix gave the good quarter to new seasons of shows like “Outer Banks,” “You” and “Ginny & Georgia” and the release of the movie sequel “Murder Mystery,” starring Adam Sandler and Jennifer Aniston. Season 1 of spy drama “The Night Agent” performed particularly well, with more than 515 million hours of viewing.

At one time, Netflix’s biggest liability was its reliance on constantly churning out original shows and movies. Now the company is producing new seasons of already established shows and movie sequels more often, a shift that has some analysts worried.

“The health of any streaming service is going to be dictated by the strength of its catalog,” said Stephen Beck, founder of management consultancy cg42.

He said he’s worried Netflix’s reliance on existing shows will make the service less valuable. He noted that a typical consumer is likely to subscribe to two or three streaming services, with Amazon Prime Video likely being one because of everything a Prime subscription offers.

“You have to renew the portfolio, and so that’s by far the most important thing they can talk about and highlight,” Beck said.