Netflix DVD Rental Business, Dead at 25

Wilson Chapman and Ryan Lattanzio
Updated ·3 min read
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Netflix DVDs are going the way of Blockbuster (the store, as well as the streamer’s own show of that name). The company’s DVD rental business, formerly its main stream of revenue, will end this fall, with the final DVDs being shipped out September 29.

The news was announced Tuesday via a letter posted on Netflix’s newsroom, signed by the company’s co-CEO Ted Sarandos. In his letter, Sarandos attributed the decision to shrinking demand for DVDs but credited the company’s mail-order service for paving the way to its eventual streaming empire.

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“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 said in the letter. “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.”

The news comes as the end of a slow decline for the DVD business, which Netflix was founded on 25 years ago. The company, established by Reed Hastings and Marc Randolph in 1997, launched its online DVD rental site with approximately 900 titles in March 1998. By 2001, Netflix had about a million subscribers, and by 2006, it had 6.3 million users. The next year, the company introduced its streaming website for video-on-demand; by 2010, the same year Blockbuster filed for bankruptcy, it introduced a standalone subscription to the streamer separate from DVD rentals.

The streamer quickly came to overshadow Netflix’s DVD business, and in 2011 the company split its operations between Netflix for streaming and the ill-fated Qwikster for DVD rentals, an unpopular decision that Hastings reversed in less than a month. A year later, the company acquired the domain name DVD.com and has operated its physical media shipping business via the site ever since. Revenue from home rentals has steadily declined ever since; according to Associated Press, the DVD service generated $145.7 million in revenue for Netflix in 2022, just 0.5% of the company’s total revenue, and translating to roughly 1.1 to 1.3 million subscribers.

“As the DVD business continues to shrink, it’s going to become increasingly difficult to achieve that goal. In our final season, we’ll continue providing you the best service possible, all the way to the very last shipment,” said Netflix in a separate email to subscribers, noting the company had shipped five billion discs since its first days.

The news of Netflix’s axing of DVD.com came the same day the company reported its earnings for Q1 2023. The company added 1.75 million subscribers to the streamer, and posted $8.162 billion in revenue, slightly below projected figures. The company also announced that password-sharing restrictions will begin rolling out for the streamer sometime this quarter.

Read Sarandos’ statement below.

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.

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.

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.

To everyone who ever added a DVD to their queue or waited by the mailbox for a red envelope to arrive: thank you.

-Ted Sarandos

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