Netflix nights still come wrapped in red and white envelopes

SANTA CRUZ, Calif. (AP) — Netflix’s groundbreaking DVD-by-mail rental service has been relegated to a relic in the age of video streaming, but there’s still a steady — if shrinking — audience of diehards like Amanda Konkle who are happy to pay for to receive these discs in the iconic red and white envelopes.

“When you open your mailbox, there’s still something you actually want instead of just bills,” said Konkle, a Savannah, Georgia, resident who has subscribed to Netflix’s DVD-by-mail service since 2005.

It̵[ads1]7;s a small pleasure that Konkle and other still-dedicated DVD subscribers enjoy, but it’s not clear for how long. Netflix declined to comment for this story, however, during a media event in 2018co-founder and co-CEO of Netflix Reed Hastings suggested that the DVD-by-mail service may close around 2023.

When — not if — that happens, Netflix will shut down a service that has shipped more than 5 billion discs across the U.S. since its inception nearly a quarter century ago. And it will mirror the demise of the thousands of Blockbuster video rental stores that closed because they could not counter the threat of Netflix’s DVD-to-mail option.

The eventual demise of the DVD-by-post service has been inevitable since Hastings decided to spin it off from a then-nascent video streaming service in 2011. At the time, Hastings floated the idea of ​​renaming the service Qwikster—a vague idea that became so much ridiculed that it was satirized on “Saturday Night Live.” It eventually settled on its current, more prosaic handle, DVD.com. The operation is now based out of a nondescript office in Fremont, California, located about 20 miles from Netflix’s elegant Los Gatos, California campus.

Shortly before its break from video streaming, the DVD-by-mail service had more than 16 million subscribers, a number that has now dropped to an estimated 1.5 million subscribers, all in the United States, based on estimates taken from Netflix’s limited disclosures of the service in its quarterly reports. Netflix’s video streaming service now has 223 million worldwide subscribers, including 74 million in the US and Canada.

“The DVD-by-mail business bequeathed the Netflix that everyone now knows and watches today,” said Marc Randolph, Netflix’s original CEO, during an interview at a coffee shop across the street from the post office in Santa Cruz, California.

The 110-year-old post office has become a landmark in Silicon Valley history because it is where Randolph sent a Patsy Cline CD to Hastings in 1997 to test whether a record could be delivered through the US Postal Service without being damaged.

The disc arrived at Hastings’ home unblemished, 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.

With Netflix’s successful streaming service, it can be easy to assume that anyone who still pays to receive DVDs in the mail is a technophobe or someone who lives in a remote part of the US without reliable internet access. But subscribers say they stick with the service so they can rent movies that are otherwise hard to find on streaming services.

For Michael Fusco, 35, that includes the 1986 film “Power” starring a then-young Richard Gere and Denzel Washington, and 1980’s “The Big Red One” starring Lee Marvin. That’s among the main reasons he’s subscribed to the DVD-by service since 2006 when he was just a freshman in college, and he has no plans to cancel it now.

“I’ve had it for almost half my life, and it’s been a big part,” Fusco said. “When I was young, it helped me discover voices I probably wouldn’t have heard. I still have memories of getting movies and having them blow my mind.”

Tabetha Neumann is among the subscribers who rediscovered the DVD service during the 2020 pandemic lockdowns after running out of things to watch on her video streaming service. So she and her husband signed up again for the first time since canceling in 2011. Now they like it so much they’re getting a plan that lets them keep up to three discs at a time, an option that currently costs $20 per month (compared to $10 per month for the one-disc plan).

“When we started going through all the movies we wanted to see, we realized it was cheaper than paying $5 per movie on some streaming services,” Neumann said. “Also, we’ve found a lot of old horror movies, and that genre isn’t that big on streaming.”

Konkle, who has written a book about Marilyn Monroe’s movies, says she still finds movies on the DVD service — like the 1954 film “Cattle Queen of Montana,” starring future U.S. President Ronald Reagan alongside Barbara Stanwyck and the French film “Sugar ” from 1983. Cane Alley” – which helps her teach film studies as an associate professor at Georgia Southern University. It’s a viewing habit she doesn’t usually share with her classes because “most of my students don’t know what a DVD is,” Konkle, 40, said, laughing.

But for all the DVD service’s attractions, subscribers are beginning to notice signs of deterioration as the business has shrunk from generating more than $1 billion in annual revenue a year ago to an amount that is likely to fall below $200 million in revenue in year.

Katie Cardinale, a subscriber who lives in Hopedale, Mass., says she now has to wait two to four more days for records to arrive in the mail than she used to because they are sent from a distribution center in New Jersey instead of Boston. (Netflix does not disclose how many DVD distribution centers are still operating, but there were once about 50 of them in the US).

Konkle says that several plates now have cracks or other defects, and that it takes “forever” to get them replaced. And almost all subscribers have noticed that the selection of DVD titles has shrunk dramatically from the service’s peak years when Netflix boasted that it had more than 100,000 different movies and TV shows on disc.

Netflix no longer discloses the size of its DVD library, but subscribers interviewed by the AP all reported that the limited selection makes it harder to find familiar movies and popular TV shows that were once routinely available on the service. Instead, Netflix is ​​now sorting requests for titles like the first season of the award-winning “Ted Lasso” series — a release available for purchase on DVD — into a “stored” queue, signaling that it may decide to store it in the future, depending on demand.

Knowing the end is in sight, Randolph said he will mourn the death of the DVD service he brought to life while taking comfort in the legacy will live on.

“Netflix’s DVD business was part of who Netflix was and still is,” he said. “It’s built into the company’s DNA.”