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Netflix pulling out of DVD rental market

The company will ship its last rental DVD in late September.

The company will ship its last rental DVD in late September.

A DVD-by-mail envelope bearing the Netflix logo. (Graphic by The Desk)
A DVD-by-mail envelope bearing the Netflix logo. (Graphic by The Desk)

Netflix is ending its DVD-by-mail rental business after nearly 25 years, the company affirmed on Tuesday.

The move comes as Netflix has solidified itself as the streaming television and movie leader in the entertainment industry, something that was a slow burn business when it debuted more than a decade ago and has only accelerated since.

Netflix began in late 1997 as a firm that unified Internet-based tools with a traditional DVD rental business. It competed against behemoths like Blockbuster, Hollywood Video and other rental companies by allowing users to rent between one and four DVDs through the mail at one time by way of a queue that was created through the web, and without charging customers late fees that were the profitable backbone of the brick-and-mortar stores.

Netflix launched its streaming service in 2007 as a complementary offering to its DVD-by-mail business. The majority of the content offered through the streaming service — which was mostly limited to computers — was older movies and TV shows licensed by Netflix. Over the year, Netflix has incorporated more of its own programming into the service, and it has become a bigger part of the overall business.

“Those iconic red envelopes changed the way people watched shows and movies at home — and they paved the way for the shift to streaming,” Ted Sarandos, Netflix’s CEO, said on Tuesday, referring to the color of the mailers that contained Netflix DVD rentals. “To everyone who ever added a DVD to their queue or waited by the mailbox for a red envelope to arrive: thank you.”

Despite a growing consumer shift toward streaming services, Netflix continued to support its DVD-by-mail business throughout the years. The service is still popular with Americans who live in rural communities where broadband Internet can be hard to get, though the broadband gap is closing thanks in part to an uptick in fixed wireless and satellite-based services over the last few years.

Netflix says it will ship the final DVD by mail on September 29, at which point the feature will no longer be available to its customers.

On Tuesday, Netflix revealed its global subscribers drew during its most-recent financial quarter to over 232.5 million, up from 230.75 million reported three months ago. Its revenue for the quarter was $8.16 billion.

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About the Author:

Matthew Keys

Matthew Keys is the publisher of The Desk and reports on the business and policy matters involving the broadcast television, streaming video and radio industries. He previously worked for Thomson Reuters, Disney-ABC, Tribune Broadcasting and McNaughton Newspapers. Matthew is based in Northern California, has won numerous awards in the field of journalism, and is a member of IRE (Investigative Reporters and Editors).