Twenty-five years ago, two Silicon Valley entrepreneurs came up with a concept that toppled Blockbuster video stores while providing a springboard for video streaming that transformed the entertainment industry. After twenty-five years, Netflix’s once-iconic DVD-by-mail service has finally come to an end.
DVD service has Steady shrinking Netflix’s video streaming service will shut down after its five remaining distribution centers in California, Texas, Georgia and New Jersey ship out final discs on Friday.
The fewer than 1 million recipients who remain subscribed to the DVD service will be able to keep the final discs that land in their mailboxes.
Some remaining DVD die-hards will get up to 10 discs as a farewell gift from a service that has as many as 16 million subscribers. Before that, Netflix made the key decision in 2011 to separate its DVD business from its streaming business, which now has 238 million subscribers and annual revenue of $31.5 billion.
By comparison, DVD services generated just $146 million in revenue last year. Video streaming competition intensifies This has forced Netflix to cut expenses to boost profits.
“It’s very bittersweet.” In April 1998, when Netflix launched its first DVD, “Beetlejuice,” Marc Randolph was CEO. “We knew this day was coming, but the amazing thing is that it didn’t come 15 years ago.”
Although Randolph had not been involved in the day-to-day operations of Netflix for 20 years, he came up with the idea for the DVD service in 1997 with his friend and fellow entrepreneur Reed Hastings, who eventually took over made him CEO—a position Hastings has always held. stand aside earlier this year.
When Randolph and Hastings were considering the concept, the DVD format was still an emerging technology, with only about 300 titles available (at its peak, Netflix’s DVD service had more than 100,000 different titles)
In 1997, DVDs were so hard to find that when they decided to test whether a disc would make it through the U.S. Postal Service, Randolph ended up slipping a CD of Patsy Cline’s greatest hits into a pink envelope, It is then mailed to Hastings from the Santa Cruz, California post office.
Randolph spent just 32 cents on stamps to mail the CD, less than half the current 66 cents on first-class stamps.
Netflix quickly built a loyal following while banking on a then-novel monthly subscription model that allowed customers to keep discs as long as they wanted without facing Blockbuster’s late fees for delayed returns. Renting DVDs by mail became so popular that Netflix became the fifth-largest customer of the U.S. Postal Service at one point, mailing millions of discs every week from nearly 60 U.S. distribution centers at its peak.
Along the way, the red and white envelope that delivered a DVD to a subscriber’s home became an eagerly awaited piece of mail, making “Netflix Night” a cultural phenomenon. DVD service also means the end of Blockbuster. Blockbuster went bankrupt in 2010 after its management turned down the opportunity to acquire Netflix rather than try to compete with it.
But Randolph and Hastings always planned to launch video streaming, making DVD-by-mail services obsolete once technology advanced to the point where movies and TV shows could be watched over an Internet connection. This expectation was one of the reasons they chose Netflix as the name of the service over other names that were considered, such as CinemaCenter, Fastforward, NowShowing, and DirectPix (during the six-month test period, the DVD service was called “Kibble”)
“We knew from day one that DVDs were going to disappear and that this was just a temporary step,” Randolph said. “And the DVD service does this job miraculously well. It’s like a nameless booster rocket that launches Netflix into orbit and then returns to Earth 25 years later. It’s really impressive.”
read more: Netflix co-founder recalls Blockbuster ‘laughing us out of the room’ trying to sell company now worth more than $150 billion for $50 million
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