Netflix is ​​ending its DVD-to-mail service

SAN FRANCISCO (AP) – Netflix is ​​poised to shut down the DVD-by-mail rental service that set the stage for the groundbreaking video streaming service, ending an era that began a quarter-century ago when delivering discs by mail was considered revolutionary concept.

The DVD service, which still delivers movies and TV shows in the red-and-white envelopes that once served as Netflix’s emblem, plans to ship its final discs on September 29.

Netflix ended March with 232.5 million worldwide subscribers to its video streaming service, but it stopped disclosing how many people still pay for DVD-to-mail delivery years ago, as that part of the business steadily shrank. The DVD service generated $1[ads1]45.7 million in revenue last year, which translated to somewhere between 1.1 million and 1.3 million subscribers, based on the average prices paid by customers.

The growth of Netflix’s video streaming service has slowed over the past year, which has led management to place more emphasis on increasing profits. That focus may also have contributed to the decision to close down a business that was about to become a financial drain.

But the DVD service was once Netflix’s biggest moneymaker.

Shortly before Netflix broke away from video streaming in 2011, the DVD-by-mail service had more than 16 million subscribers. That number has steadily declined, and the service’s eventual demise became apparent as the idea of ​​waiting for the US Postal Service to deliver entertainment became woefully outdated.

But the DVD-to-mail service still has die-hard fans who continue to subscribe because they appreciate finding obscure films not widely available on video streaming. Many subscribers still get nostalgic when they open their mailbox and see the familiar red and white envelopes waiting for them instead of junk mail and a stack of bills.

“These iconic red envelopes changed the way people watched shows and movies at home — and they paved the way for the transition to streaming,” Netflix co-CEO Ted Sarandos wrote in a blog post about the DVD service’s upcoming closure.

The service’s history dates back to 1997 when Netflix co-founder Marc Randolph went to a post office in Santa Cruz, California to mail a Patsy Cline CD to his friend and co-founder Reed Hasting. Randolph, Netflix’s original CEO, wanted to test whether a disc could be delivered through the US Postal Service without being damaged, hoping to do the same with the still-new format that became the DVD.

The Patsy Cline CD arrived unblemished at Hastings’ home, prompting the duo in 1998 to launch a DVD-by-mail rental website that they always knew would be replaced by even more convenient technology.

“There was planned obsolescence, but our bet was that it would take longer to happen than most people thought at the time,” Randolph said in an interview with The Associated Press last year across the street from the Santa Cruz post office where he sent Patsy The Cline CD. Hastings replaced Randolph as Netflix CEO a few years after its inception, a job he did not relinquish until he resigned in January.

With just over five months left in its life, the DVD service has shipped more than 5 billion discs across the US – the only country it has ever operated in. The end mirrors the demise of the thousands of Blockbuster video rental stores that closed because they could not countering the threat posed by Netflix’s DVD-to-mail option.

Even subscribers who remain loyal to the DVD service could see the end coming when they noticed the shrinking selection in a library that once had more than 100,000 titles. Some customers have also reported having to wait longer for discs to be delivered as Netflix closed dozens of DVD distribution centers with the move to streaming.

“Our goal has always been to provide the best service for our members, but as the business continues to shrink, that is going to become increasingly difficult,” Sarandos acknowledged in his blog post.

Netflix rebranded the rental service as DVD.com – a prosaic name decided upon after Hastings floated the idea of ​​calling it Qwikster, an idea that was widely ridiculed. The DVD service has been operating out of a nondescript office in Fremont, California, which is about 20 miles from Netflix’s posh campus in Los Gatos, California.