Netflix flinging out DVDs like frisbees as night comes for legacy business
Subscribers told to opt in for chance at 10 coasters you can keep forever
Would you believe us if we said Netflix is still sending out rental DVDs to people's homes some 25 years later? Not for much longer, mind.
It's all too easy to forget this is how the eminent movie and TV streaming biz arrived on the scene, though only in the US, as a harebrained scheme by two colleagues after their software company was acquired.
There are differing accounts of Netflix's founding. Executive chairman Reed Hastings once said it was inspired by a $40 late fee for Apollo 13 from Blockbuster, yet co-founder and first CEO Marc Randolph claimed this was "crap" to market the fledgling company. The canonical spark was the desire to be the "Amazon.com of something" – and that something ended up being DVDs by virtue of their slim profile and durability for mail order.
Incidentally, during hard times in the early days, Netflix asked Blockbuster to buy it for $50 million, which was taken as a joke. Netflix now has a market capitalization of $183 billion and Blockbuster is a lifeless husk.
What's surprising is how long the DVD portion of the business (a 0.5 percent portion) has endured, though it's easy to see why CEO Ted Sarandos said back in April that the service would be wound down on September 29.
In fact, Netflix places so little value on the segment that it doesn't want its last shipments back. Strange DVD subscriber people in the US received an email offering the chance for up to 10 extra discs rather than the usual maximum of three if they opted in before August 29.
"After 25 years of movies in the mail, we're approaching the end of our final season," it read. "We really appreciate that you're sharing movie nights with us until the last day. Let's have some fun for our finale!"
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After entering, the customer is told: "You might find up to 10 extra red envelopes in your mailbox after September 29th. You won't know if any are headed your way until they arrive. Keep an eye out and happy viewing!"
This was followed up by the DVD Netflix X (née Twitter) account saying: "We are not charging for any unreturned discs after 9/29. Please enjoy your final shipments for as long as you like!"
Is it a sad end to what was once Netflix's entire business model? For this writer, who long ago moved to Blu-ray and doesn't even buy those anymore, it's a bizarre state of affairs that a small group of people have clung to the service. Increasing internet speeds have made physical formats for film and music essentially obsolete – taking some bricks-and-mortar retail chains with them – yet it is also easy to see why it could be a lifeline for avid film fans in remote areas where connections are spotty.
The shortcoming of Netflix as a streaming service, however, is that there is so rarely anything you actually want to watch on it, algorithms be damned. Tapping in the name of a specific film is usually met with titles that are vaguely in the same ballpark, but resolutely not what you were hoping for. This is because streaming rights are expensive and don't offer much of a return, so Netflix now leans far more toward producing "bingeable" original content it hopes can draw in new subscribers and keep them there.
The irony is that Netflix's DVD hoard has far more and better films in stock than its mainstream incarnation ever will, and very soon it will be gone. ®