Season finale
Netflix is giving up on delivering red envelopes filled with DVDs to subscribers, yesterday announcing the closure of its DVD-by-mail business. That marks the end of an era for the company that shipped its first DVD, a copy of Tim Burton's Beetlejuice, back in 1998 and has gone on to mail over 5.2 billion DVDs since.
After launching its streaming service in 2007, the writing has been on the wall for Netflix’s DVD division. As early as 2009, CEO Reed Hastings was anticipating that the core DVD division was doomed — a prediction that in hindsight feels obvious, but at the time seemed bold.
As subscriber numbers climbed, soaring past 50 million by 2014, Netflix had already started its second big pivot: original content. As the rest of the industry woke up to the power of streaming, Netflix invested heavily into its own programming, producing some great (and some terrible) shows, helping the company hold on to its early lead in the streaming wars. Since then, its DVD business has steadily diminished, falling from revenue of more than $1 billion a decade ago to just $146m last year, less than 0.5% of the company’s total.
For you
Even with the DVD service now ejected, the role it's had in shaping what Netflix is today is undeniable. It was where the company first introduced its subscription model and where it developed its algorithmic recommendations, suggesting your next DVD based on what's trending, new releases and a list of ‘top picks for you’.
As the red envelopes are retired, Netflix faces a stream of challenges in the form of an increasingly saturated market, a possible writers' strike and a faulty live business — as anyone who recently tried to tune in to watch the much-hyped “Love Is Blind” reunion will know.
