It’s time to say goodbye to those red envelopes. Netflix announced on Tuesday that it would end 25 years of mailing DVDs of shows and movies to its subscribers.
Netflix’s co-chief executive Ted Sarandos said mailing DVDs had “paved the way for the shift to streaming”, but that “after an incredible 25-year run, we’ve made the difficult decision to wind down at the end of September”.
“Our goal has always been to provide the best service for our members but as the business continues to shrink that’s going to become increasingly difficult,” Sarandos said.
Netflix launched as an alternative to video rental stores, allowing customers to rent DVDs that were sent to their homes. The first DVD it sent out was a copy of Tim Burton’s 1988 classic Beetlejuice.
The business model took off, and soon Blockbuster, the biggest video rental store chain, and its rivals were in trouble.
But the shift to streaming has eaten away at the company’s DVD by post business, and accounted for $126m of Netflix’s $31.6bn in revenues last year.
The announcement of the end of the postal service came as Netflix posted a mixed bag of results for the first quarter of the year. The company’s revenues for the quarter were $8.18bn, slightly less than analysts had forecast. But Netflix added 1.75million subscribers and ended the period with 232.5 million customers.
A year ago, Netflix announced that it had lost subscribers for the first time in a decade, an announcement that sent the company’s share price into a tailspin.
Facing stiff competition from rivals including Apple, Disney and Hulu, the company has announced new ad-supported tiers and is cracking down on password-sharing. The scheme was trialled in Chile, Costa Rica and Peru.
On Tuesday the company said it was delaying the broader rollout of its password-sharing crackdown, which had been set to take place late in the first quarter, but will now start more broadly by the end of June.
“While this means that some of the expected membership growth and revenue benefit will fall in Q3 rather than Q2, we believe this will result in a better outcome from both our members and our business,” the company said in its earnings release.
