Netflix Inc. is discontinuing its DVD-by-mail service, the company announced in a blog post on Tuesday, putting an end to a service it launched roughly 25 years ago.
The company reported that its DVD rental business has been declining and that it will no longer be able to provide quality service. On September 29th, Netflix will ship the last discs.
Netflix Co-CEO Ted Sarandos wrote in a blog post announcing the DVD service’s “final season” that “those iconic red envelopes changed the way people watched television and movies at home, and they paved the way for the transition to streaming.”
The company said its DVD rental business has been declining and it cannot provide quality service.
In his autobiography, Netflix co-founder Marc Randolph describes how he and co-founder Reed Hastings considered challenging Blockbuster Video with mail-order VHS cassettes, but the cost was prohibitive. They opted for a more cost-effective alternative: selling and renting DVDs online.
It was a calculated gamble that the nascent DVD player, which first went on sale in the United States in 1997, would take on with consumers. According to Randolph, the service launched in 1998 with fewer than 1,000 titles.
Netflix’s Birth and Amazing Life.
“Betting on DVDs was a risk,” Randolph wrote in his book “That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea.” He added, “However, this may also be our opportunity to finally break into that category.”
It was the first time Netflix’s bet on a new technology allowed it to compete with an established rival. In 2010, rival Blockbuster filed for bankruptcy.
“From the start, our members adored the selection and control that direct-to-consumer entertainment provided,” wrote Sarandos.
Consumers protested vociferously in 2011 when Netflix attempted to separate its DVD rental business and online streaming into a distinct service called Qwikster. The scheme was eventually abandoned.