Netflix is shutting down its DVD rental business after 25 years of operation. The company has announced that it will “wind down” its DVD rental service, DVD.com, with the last movie discs mailing on September 29th. The reason behind this decision is that the demand for physical rentals is shrinking, making it “increasingly difficult” for the company to offer the quality of service it wants.
Since Netflix shipped its first disc in 1998, it has mailed over 5.2 billion movies in its signature envelopes to more than 40 million customers. However, the company began streaming on-demand video in 2007, and that business quickly became its most popular offering by 2009. After an unsuccessful attempt to spin off the mailed rentals as Qwikster in 2011, Netflix moved them to DVD.com in 2016. By that point, the company had stopped mailing DVDs on Saturdays and had started producing original streaming shows.
The decision to axe the DVD-by-mail unit could help Netflix trim costs, even if the savings are relatively small. While the company is recovering from a bleak 2022, its profits in the first quarter were still worse than they were a year ago, and subscriber growth was relatively modest, with 1.7 million new users. The disc market has been on a sharp and steady decline for years, with sales alone dropping 19 percent from 2021 to 2022, according to VideoScan/MediaPlayNews data.
While retail rentals are still available through Redbox kiosks and similar options, it’s safe to say that Netflix has played a major role in shaking up the movie rental business. The company helped people stay at home and changed expectations for good, despite facing competition from Blockbuster and other rivals who entered the market years later. Although it is a sad moment for home video fans, it is a necessary step for Netflix to focus on its popular streaming business.
