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The
company said its DVD rental business had been shrinking and it
will not be able to continue to offer quality service. Netflix
will ship the last discs on Sept. 29.
"Those iconic red envelopes changed the way people watched shows
and movies at home - and they paved the way for the shift to
streaming," Netflix Co-CEO Ted Sarandos said in a blog post
announcing the DVD service had entered its "final season."
Netflix co-founder Marc Randolph described in his autobiography
how he and co-founder Reed Hastings had flirted with the idea of
challenging Blockbuster Video with mail-order VHS cassettes, but
it would have cost too much. They instead landed on a more
cost-effective proposition: DVDs sold and rented online.
It was a calculated risk that the nascent DVD player, which went
on sale for the first time in the U.S. in 1997, would catch on
with the consumer. The service launched in 1998 with fewer than
1,000 titles, according to Randolph's account.
"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: "But it might also be our way to finally crack
that category."
It was the first time Netflix's gamble on an emerging technology
allowed it to challenge an entrenched competitor. Rival
Blockbuster filed for bankruptcy in 2010.
"From the beginning, our members loved the choice and control
that direct-to-consumer entertainment offered," wrote Sarandos.
When Netflix attempted in 2011 to split its DVD rental business
from online streaming into a separate service called Qwikster,
it provoked howls of protest from consumers. The plan was
ultimately scrapped.
(Reporting by Dawn Chmielewski in Los Angeles and Yuvraj Malik
in Bengaluru; Editing by Krishna Chandra Eluri and Matthew
Lewis)
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