Netflix To End DVD-By-Mail In September

LOS GATOS, CA — After mailing over 5 billion DVD movies in the last 25 years, Netflix announced it is ending the DVD movie-by-mail service as of September 29, 2023.

Co-founder Reed Hastings and iconic Netflix product

It was that unique service upon which Netflix was built and that would help propel it over rivals like Blockbuster Video. But broadband streaming would soon takeover as the primary means of movie distribution. And with it new opportunities for content creation.

“After an incredible 25 year run, we’ve decided to wind down later this year,” Netflix wrote in its Letter to Shareholders April 18, 2023. “Our goal has always been to provide the best service for our members but as the DVD business continues to shrink that’s going to become increasingly hard.”

The statement continues:

“So we want to go out on a high, and will be shipping our final DVDs on September 29, 2023,” the company states.

“From the very beginning, our members loved the choice and control that direct-to-consumer entertainment offered, including the variety and quality of our titles and the ability to binge watch entire series.

“DVD paved the way for streaming, ensuring that so much of what we started will continue long into the future. 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 have achieved and excited to continue pleasing entertainment fans for many more decades to come.

“Thanks to all our employees over the years that worked so hard to build the booster rocket that got streaming to a leading position,” the company states.

From USPS Newslink June 2020:  Netflix’s video streaming service is surging during the coronavirus pandemic as millions of homebound Americans binge on movies and TV shows, but the digital media giant is still in the mailstream, too.

More than 2 million people received DVDs in the mail through Netflix’s rental service last year, according to the most recent data available. Although that number is down sharply from 2011, when the company’s DVD service peaked at 14 million subscribers, lots of people continue to receive Netflix’s iconic red envelopes in the mail.
Industry experts point to two main reasons: broadband access and catalog size.

Video streaming requires access to broadband internet, which isn’t available in many rural areas. But those locations are served by the Postal Service, as part of its universal service obligation.

For other Netflix DVD customers, the issue is choice.

The company won’t disclose numbers, but industry observers estimate Netflix has the rights to stream about 5,000 titles in the United States.

However, the company’s DVD catalog exceeds 100,000 titles.

“Initially, we did DVDs because video stores were phasing out and it seemed convenient,” said Martha Blair, a resident of The Dalles, OR, who has been a Netflix DVD subscriber since 2010.

“We tried streaming early on and I didn’t like it because I couldn’t get the movies I wanted to see. The DVD service offered a wider variety of movies,” she said.

Blair and her husband watch around two DVDs a week. They’ve re-added Netflix’s streaming service to their subscription so their teenage children can stay current with what their friends are watching.

“There are some shows I’ve started watching with the streaming,” she said.

Netflix began life in 1997 as a DVD-by-mail service. By 2009, the company boasted 10 million subscribers to its DVD service and was shipping 900 million DVDs a year through the Postal Service, accounting for 1.3 percent of all mail in the United States.

Netflix’s business model not only proved wildly popular for customers, it changed how people rented DVDs, eventually helping to push the Blockbuster DVD rental store chain — its largest competitor at the time — into bankruptcy in 2010.

But Netflix’s mail-order DVD business would soon face stiff competition — from the company’s own video streaming service, which it introduced in 2007.

By 2012, DVD subscribers had fallen to 10 million and continued to fall to 2.1 million at the end of 2019. By comparison, the company recently reported it had 70 million U.S. streaming subscribers at the end of March.
Last summer, the company celebrated shipping its 5 billionth DVD — all through the U.S. Mail.

“5,000,000,000 shipments. FIVE BILLION. The most heartfelt thank you to our incredible members that have been with us for the past 21 years of DVD Netflix,” the company said in a tweet last August.

Though its DVD business now only has around 2 million subscribers, those customers contribute heavily to Netflix’s bottom line — $174 million in profit for 2019, or $80.81 per subscriber.

Netflix’s U.S. streaming business brought in $54.30 per subscriber in 2019.

The company has been mum on its plans for the DVD business, going so far as to not break out figures for it in its most recent quarterly filing. But observers expect that as long as it remains profitable, Netflix will keep mailing DVDs.

Not all of its customers are so sure, though.

“I assume they’ll stop mailing DVDs in the next couple of years,” said Blair. “Times change, and that’s fine.”