Netflix to end its DVD-by-mail business in an end of an era

Netflix’s DVD-by-mail service is coming to an end.

The company announced Tuesday that it is saying goodbye to its original business — mailing out DVDs in its signature red envelopes — after 25 years.

“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,” Netflix Co-Chief Executive Ted Sarandos wrote in a blog post Tuesday. “So we want to go out on a high, and will be shipping our final discs on September 29, 2023.”

Netflix’s business shifted long ago from its origins of mailing out DVDs, starting in 1998. It’s now a streaming service with more than 230 million subscribers and a robust apparatus for producing its own shows and movies.

And over the last year, Netflix has morphed its business into one that is no longer just a subscription video-on-demand service but one that offers live programming, mobile games and a version with ads.

The news comes as Netflix reports first-quarter earnings.

To cope with competition, Netflix has diversified its library with mobile games, live programming and more local language content such as Korean dramas.

The company also has looked for new revenue streams by compelling nonpaying Netflix users to get subscriptions. In the first quarter, Netflix’s paid sharing options expanded to more countries, including New Zealand and Canada. It has yet to come to the U.S.

While Netflix remains the dominant subscription streaming service, its market share in streaming revenue is shrinking due to increased competition.

By the end of the year, Netflix is expected to have a 26.3% share of U.S. subscription streaming revenue, down from 49.1% in 2018, before the launch of such rivals as Apple TV+ and Disney+, according to research firm Insider Intelligence.

Popular series in the first quarter include action thriller “The Night Agent,” which has drawn more than 605.6 million hours of viewing time since it launched March 23 and is the ninth most watched show on Netflix, based on hours watched in the first 28 days on the service.

But Netflix stumbled last Sunday when it planned to live broadcast the “Love Is Blind” Season 4 reunion show, which went awry, causing significant delays and many users not being able to see the program until the next day.

It was the second time Netflix delved into live programming after Chris Rock’s comedy special in March. Many streamers, including Apple TV+ and Amazon Prime Video, have dabbled in live programming to create appointment-style TV viewing for events such as sports games.

Netflix executives will hold a 3 p.m. earnings presentation.

The earnings report comes as analysts and studios worry about a potential strike by unionized TV and film writers. Hollywood screenwriters are negotiating with with the Alliance of Motion Picture and Television Producers, of which Netflix is a member, over a new three-year contract. The current deal expires May 1.

Writers are seeking more compensation for their work, including higher residual payments from streaming.

This week, members of the Writers Guild of America voted 98% in favor of authorizing their leaders to call a strike if an agreement is not reached with the AMPTP. A strike could significantly affect studios, which rely on writers for scripted programming.

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