Why Are 2 Million People Still Getting Netflix DVDs by Mail?

[Karlston]

Why Are 2 Million People Still Getting Netflix DVDs by Mail?

The company still gets a healthy slice of revenue from disc rentals—but the service has suffered as a result of the pandemic.

Netflix made almost $300 million in revenue from its DVD service in 2019, but that’s dwarfed by the $20 billion it made from streaming subscribers over the same period.Photographer: Andrew Harrer/Bloomberg/Getty Images

 

 

Eric signed up for Netflix in around 2005—drawn in by the convenience. Instead of going to the local branch of Blockbuster to rent a movie, if you waited a couple of days it would arrive in the post, without your having to leave the house. And there was a huge selection of titles—much wider than a small local rental place would be able to stock. “I could sit at home and get almost any movie I wanted,” says the US-based project manager.

 

By 2007, Netflix delivered its billionth DVD—a copy of Babel, dispatched to a customer in Texas from one of its 42 national distribution centers across America, which served 6.3 million subscribers. But the company’s business model was already starting to change. In January 2007, Netflix announced the launch of its streaming service—which quickly ballooned into a tech giant, with billions of dollars to spend on producing its own original content and 167 million subscribers across 190 countries.

 

But Eric, now aged 41, kept on getting DVDs and Blu-Rays by mail—sometimes he watched them and sent them back quickly, other times they sat unopened for months. For most of us, the idea of deciding you want to watch a film, and then waiting for a rental copy to be physically mailed to you seems almost comically quaint. But Eric is far from alone. Of all the huge numbers marking out Netflix’s rapid growth, perhaps this is the most surprising: There are still more than 2 million people in the United States getting Netflix DVDs by post.

 

Some subscribers value the wider range of options available on DVD. As Netflix has grown its streaming service, the selection of good films seems to have shrunk (even if the overall number has grown), as the company focuses its efforts on original television shows and documentaries.

 

For some customers, like Jennifer from San Francisco, DVDs represent the best way to see new releases as soon as possible. “There were more titles and newer movie releases than on cable premium channels like HBO and Showtime, and I wanted to watch more of those,” she says—although getting the most popular titles sometimes meant a long wait.

 

“The selection is much larger than on the streaming service,” says Eric, who also has a Netflix streaming account, as well as Hulu, Amazon Prime, and occasionally Disney+. “Streaming is great if I want to sit on the couch and watch something right now. However, streaming services may not be great if you want to watch a particular movie.”

 

Internet speeds are another factor. Some rural parts of the US still have poor internet infrastructure, and streaming eats up allowances for customers who may have a monthly data cap.

 

For film buffs, image quality is a further consideration. “There is still compression in streaming movies,” says Eric, who has just watched The Matrix Reloaded on Blu-ray and has Lawrence of Arabia and Sunshine in his queue. “I notice compression artifacts in streaming movies at times, and they are distracting. Also, I feel that certain movies are extremely appealing visually, and I prefer those in Blu-ray.”

 

None of the people we spoke to knew anyone else who was still getting DVDs by mail, and subscriber numbers to the service are falling at a rate of half a million a year. The company still makes a healthy amount of revenue from DVD rentals—almost $300 million in 2019 according to a recent SEC filing—though that’s dwarfed by the $20 billion it made from streaming subscribers over the same period.

 

It’s unclear how much longer Netflix will keep its DVD service operating. In 2011, it tried to spin it out into a separate brand (called Qwikster), which would have seen subscribers paying separately for DVDs and streaming. The company was forced to do a U-turn after customer outcry—it lost half of its stock value in two months and shed 800,000 subscribers. In December 2019, Netflix CEO Reed Hastings said he was in no hurry to get rid of it—and that he could see it lasting at least another five years.

 

Coronavirus has proven both a blessing and a curse from that perspective—people have a lot more time, and they’re realizing that the streaming library doesn’t quite have the depth they’d like, so some are turning back to old media. Joe, a 45-year-old freelance writer from Colorado, actually resubscribed to Netflix’s DVD service recently. “We used to have Netflix DVD years ago, like a lot of people, but we reactivated just within the last month because streaming Netflix has a comparatively terrible selection of movies,” he says. “Several of the movies we wanted to see aren’t available on any streaming platform.”

 

But the service has suffered as a result of the pandemic. The much publicized problems the US Postal Service has been having means it’s been difficult for people to return and receive new discs—films are taking three or four days to arrive instead of one or two. And the lack of new movie releases means there have been fewer and fewer DVDs actually coming out for people to watch—users on Reddit are complaining that none of the films near the top of their queue are available. “The only reason I haven't canceled is because of hope and curiosity,” says Jennifer. “I have come close to canceling. I have gone down my list of DVD titles, as the older titles get closer to being mailed I have had to take out the titles I watched already and I’m left with not so much to watch. If by December they haven't come out with new releases, I may very well cancel my membership.”

 

This story originally appeared on WIRED UK.

 

 

Why Are 2 Million People Still Getting Netflix DVDs by Mail?