Netflix ends DVD rentals after 25 years

Netflix DVDs are going the way of Blockbuster (the store, as well as the streamer’s show of that name). The company’s DVD rental business, previously its main source of income, will end this fall, with the last DVDs shipped on September 29.

The news was announced on Tuesday mail sent in the Netflix 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 with paving the way for his ultimate streaming empire.

“Our goal has always been to provide the best service to our members, but as business continues to shrink, that becomes increasingly difficult,” Sarandos said in the letter. “These iconic red envelopes changed the way people watched shows and movies at home – and paved the way for the transition to streaming. From the beginning, our members have loved the direct-to-consumer entertainment options and control: a wide selection of titles and the ability to watch entire series.”

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

The streamer quickly overshadowed Netflix’s DVD business, and in 2011 the company split its operations between streaming Netflix and the ill-fated DVD rental Qwikster. It was an unpopular decision that Hastings reversed in less than a month. A year later, the company purchased the DVD.com domain name and has operated its physical media delivery business through this site ever since. Incomes from apartment rentals have been steadily decreasing ever since; Based on Associated Pressthe DVD service generated $145.7 million in revenue for Netflix in 2022, just 0.5% of the company’s total revenue, and roughly 1.1-1.3 million subscribers.

“As the DVD business continues to shrink, it will become increasingly difficult to achieve this goal. In the final season, we will continue to provide the best possible service until the last shipment,” Netflix said in a separate email to subscribers, noting that the company has shipped five billion discs since its early days.

The news of DVD.com being spun off by Netflix came on the same day that the company reported its Q1 2023 earnings. The company added 1.75 million subscribers to the streamer and posted revenue of $8.162 billion, slightly below the projected figure. The company also announced that it will begin rolling out password sharing restrictions to the streamer sometime this quarter.

Read Sarandos’ statement below.

After an incredible 25 year run, we have decided to retire DVD.com later this year. Our aim has always been to provide the best service to our members, but as business continues to shrink, this is becoming more and more difficult. So we want to go big and release our last records on September 29, 2023.

These iconic red envelopes changed the way people watched shows and movies at home – and paved the way for the transition to streaming. From the beginning, our members have loved the choice and control that direct-to-consumer entertainment offers: a wide selection of titles and the ability to watch entire series. DVDs also led to original programming for the first time – with Red Envelope Entertainment titles including Sherrybaby and Zach Galifianakis Live at the Purple Onion.

We feel privileged to have shared movie nights with our DVD members for so long, we’re so proud of what our staff has accomplished, and we’re excited to continue delighting entertainment fans for many decades to come.

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

-Ted Sarandos

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