November 28, 2023

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

Before it disrupted the entertainment industry and ushered in the streaming age, Netflix was a company whose business model revolved around sending DVDs by mail in easily recognizable red and white envelopes. At its peak in 2010, about 20 million people subscribed to DVD services. But the practice has long been considered anachronistic, and the company said Tuesday that it would send the final DVD to customers on Sept. 29.

How many customers do you have? Netflix no longer publishes these numbers. But whoever they are, it’s time for them to wipe off any DVDs they might have lying around and send the red envelopes back to Los Gatos, California, where they can retire to the landfill forever.

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

The letter also mentions some DVD trivia. In March 1998, “Beetlejuice,” starring Michael Keaton and Geena Davis, was the company’s first DVD release. The most frequently requested was the feel-good movie “The Blind Side,” starring Sandra Bullock. Over the years, the company has shipped more than 5.2 billion DVDs.

The DVD announcement was part of Netflix’s first-quarter earnings report, which illustrated how streaming has become the company’s dominance. Netflix had a strong fourth quarter, adding 7.7 million subscribers, and the company said revenue rose 4% from a year earlier to $8.1 billion, with a profit of $1.3 billion.

The company also said its average paid membership was up 4% from last year and added 1.75 million subscribers. Netflix’s subscriber base currently totals 232.5 million worldwide.

But Netflix just missed its revenue guidance for the quarter and missed Wall Street’s expectations for new subscribers, leaving analysts concerned that it has yet to bounce back from last year’s correction.

The company faces serious headwinds, including a possible writers’ strike, rising competition in streaming and a boom in the live-streaming business, which will faltering weekend When technical difficulties delayed Netflix’s much-hyped “Love Is Blind” reunion show.

The first-quarter results “raise open questions about the company’s ability to revive its business through an advertising layer and a paid password-sharing program,” said Paul Verna, principal analyst at Insider Intelligence.

Mr. Verna added that Netflix’s second-quarter revenue outlook also came in below investors’ expectations. “These are worrying signs for a business that, while still a market leader, is struggling to revive its vibrancy,” he said.

Mr Sarandos played down any disappointment, saying the quarter – Greg Peters’ first, also as co-chief executive – “was a business-as-usual quarter for us”.

Mr Peters acknowledged the problems with the “Love Is Blind” livestream. “We have not lived up to the standards we expect ourselves to serve our members,” he said.

While releasing some details, Netflix said it was satisfied with the performance of its new ad tier, which offers monthly subscriptions as low as $6.99, and that there was little evidence that people were switching from its standard and premium plans to its cheaper plans. Advertisement Supported Program.

The company also said that its efforts to combat password sharing in four markets (Portugal, Spain, New Zealand and Canada) are progressing well. In Canada, its paid membership base is now larger than before the crackdown, and revenue growth is now faster than in the U.S., the company said.

The company intends to expand the strike to a wider area, including the U.S., this quarter.

Netflix credited the strong quarter to new seasons of shows like “The Bund,” “You” and “Ginny and Georgia,” as well as a sequel to “Murder Mystery,” starring Adam Sandler and Jennifer Aniston. The first season of the spy drama “The Nightmare” performed particularly well, with more than 515 million hours watched.

Once upon a time, Netflix’s greatest burden was its reliance on a constant stream of original shows and movies. The company is now more frequently producing new seasons of already-released TV shows and sequels to movies, a shift that has some analysts concerned.

“The health of any streaming service will depend on the strength of its catalog,” said Stephen Baker, founder of management consultancy CG42.

He said he was concerned that Netflix’s reliance on existing programming would reduce the service’s value. He noted that a typical consumer might subscribe to two or three streaming services, and Amazon Prime Video might be one because of everything else a Prime membership offers.

“You need to refresh the portfolio, so that’s by far the most important thing they can talk about and bring up,” Mr Baker said.

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