Netflix shutters its subscriber-based DVD rental business after 25 years

The year was 1998, when Netflix shipped its first ever red envelope containing the DVD of Tim Burton’s fantasy horror comedy ‘Beetlejuice’. The film starred Alec Baldwin, Geena Davis, Jeffrey Jones, Catherine O'Hara, Winona Ryder and Michael Keaton in prominent roles. Cut to September 29, 2023... the day when Netflix shipped out its last DVD rental in its trademarked red envelope. With this, Netflix shuttered down its subscriber-based DVD rental business after 25 years!

As per a news report in CNN Wire, it has been reported that the company (Netflix) had announced earlier this year that it was shutting down its DVD-by-mail service after it gradually shifted its focus to streaming content online. There were also other news reports which stated that the shutters on DVD rentals will only help Netflix focus on its expansion in other markets like gaming and interactive content.

In his blog, Ted Sarandos of Netflix wrote (during April this year), “After an incredible 25 year run, we’ve decided to wind down DVD.com later this year. 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”.

He added, “Those iconic red envelopes changed the way people watched shows and movies at home — and they paved the way for the shift to streaming. From the beginning, our members loved the choice and control that direct-to-consumer entertainment offered: the wide variety of the titles and the ability to binge watch entire series. DVDs also led to our first foray into original programming — with Red Envelope Entertainment titles including Sherrybaby and Zach Galifianakis Live at the Purple Onion”.

He had also added, “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”.

Even though Netflix has now officially discontinued their DVD rental services, they have allowed the customers to retain their rental disc. Adding to that, the company has also decided that, the customers can now request upto 10 more films, which will help the company in clearing out its remaining inventory. The company also added that it will not levy any charges for any of their unreturned discs after September 29 of this year, thus, enabling their customers to enjoy the DVDs for as long as they wish to.

In his blog, Ted Sarandos revealed that Netflix had shipped an astounding 5.2 billion films in their iconic red envelopes to more than 40 million customers (which formed their subscriber base). He also wrote that, ‘The Blind Side’ was their most popular title and that they had supported 20 main genres and 530 sub genres’.

As per a report in CNN, a few long-time customers continued to find value in the DVD option, even though it is outdated in today’s day and age and also with the advent of digital platforms. There were others who opined that, since they did not have access to faster broadband connections, they still preferred the DVDs.

Meanwhile, Eric Schmitt, (Senior Director Analyst, Gartner Research) attributed the cost factor as one of the reasons. A news report by CNN stated him saying that moving plastic discs around costs far more money than streaming digital bits and that removing and replacing damaged and lost inventory were also cost considerations.