Netflix DVDs in mail for last time

Subscribers can keep discs as service ends

The curtain has come down on Netflix’s once-iconic DVD-by-mail service, a quarter-century after two Silicon Valley entrepreneurs came up with a concept that obliterated Blockbuster video stores while providing a springboard into video streaming that has transformed entertainment.

The DVD service that has been steadily shrinking in the shadow of Netflix’s video streaming service shut down after its five remaining distribution centers in California, Texas, Georgia and New Jersey mailed out their final discs Friday.

The fewer than 1 million recipients who still subscribe to the DVD service will be able to keep the final discs that land in their mailboxes.

Some of the remaining DVD diehards will get up to 10 discs as a going away present from a service that once boasted as many as 16 million subscribers.

That was before Netflix made the pivotal decision in 2011 to separate the DVD-side business from a streaming business that now boasts 238 million subscribers and generated $31.5 billion in revenue last year.

The DVD service, in contrast, brought in just $146 million in revenue last year, making its eventual closure inevitable against a backdrop of stiffening competition in video streaming that has forced Netflix to whittle expenses to boost its profits.

“It is very bittersweet.” Marc Randolph, Netflix’s CEO when the company shipped its first DVD, “”Beetlejuice,” in April 1998. “We knew this day was coming, but the miraculous thing is that it didn’t come 15 years ago.”

Although he hasn’t been involved in Netflix’s day-to-day operations for 20 years, Randolph came up with the idea for a DVD-by-mail service in 1997 with his friend and fellow entrepreneur Reed Hastings, who eventually succeeded him as CEO – a job Hastings held until stepping aside earlier this year.

Back when Randolph and Hastings were mulling the concept, the DVD format was such a nascent technology that there were only about 300 titles available at the time (at its height, Netflix’s DVD service boasted more than 100,000 different titles)

In 1997, DVDs were so hard to find that when they decided to test whether a disc could make it thorough the U.S. Postal Service that Randolph wound up slipping a CD containing Patsy Cline’s greatest hits into a pink envelope and dropping it in the mail to Hastings from the Santa Cruz, California, post office.

Randolph paid just 32 cents for the stamp to mail that CD, less than half the current cost of 66 cents for a firstclass stamp.

Netflix quickly built a base of loyal movie fans while relying on a thennovel monthly subscription model that allowed customers to keep discs for as long as they wanted without facing the late fees that Blockbuster imposed for tardy returns.