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Started around 25 years ago, DVD rental was once a major income source for Netflix, which now owns a majority of the global streaming market
Digital streaming company Netflix has just announced that it is finally winding up its DVD-by-mail business, which started around 25 years ago and was once a major income source for the company.
Releasing this news on its blog post, Netflix said that its DVD rental business has been shrinking with time thus forcing them to wind up operations. The company said that it will no longer continue its DVD rental business and send out its last DVD on 29th September.
Delivered in red envelopes, the DVD’s tell us a lot about the history and humble beginnings of Netflix. Worth over $150 billion, the company was once dependent on the revenue from its DVD rental service, until it found major success in the digital market.
“Those iconic red envelopes changed the way people watched shows and movies at home – and they paved the way for the shift to streaming,” said Netflix Co CEO Ted Sarandos, announcing that the DVD by mail service has entered its “final season.”
When starting out its business in 1997, Netflix’s biggest competitor was Blockbuster, a video rental service that had its outlets across the whole US. Inorder to avoid competition, Netflix founders decided to offer a unique proposition and started the home delivery for their DVDs.
Launched in 1998, the DVD home delivery business was a calculated risk that helped Netflix set its foot in the already concentrated DVD market. According to Netflix co-founder Randolph, Netflix started this DVD home delivery with fewer than 1,000 titles.
“”From the beginning, our members loved the choice and control that direct-to-consumer entertainment offered,” said Sarandos.
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