Many see this as an end of an era regarding how people watch home movies and entertainment. After being founded on their long successful DVD mail-in rental delivery system, Netflix had announced that they will end one of their longest lasting services. This comes at a pivotal time for the company as now it has become one of the largest streaming media companies in the world. According to The Hollywood Reporter, their DVD rentals competitor, Redbox, is in a position to potentially acquire Netflix’s DVD rental business.
Many young audiences know Netflix for being a powerhouse in the steaming world and a producer of many original shows and movies. But for those that don’t know, Netflix was founded by Marc Randolph and Reed Hastings in August 1997 as a DVD rental company. They were the first to ship published movies and shows through mail and on a subscription-based model. Compared with its main competitor at the time, Blockbuster, Netflix implemented this service where anyone can rent unlimited DVDs without due dates, late fees, shipping and handling fees, or per-title rental fees.
This was a game changer for home entertainment, especially during the Dot Com Bubble in the early 2000s. At some points during this time, Amazon and even Blockbuster themselves had chances to either buy the company outright or have a substantial stake in it. Needless to say both talks fell through, and Netflix soon overtook Blockbuster as the lead DVD rental company with more than 16 million subscribers.
That is until Redbox came into the picture in 2004. While Netflix undermined Blockbuster’s strategy by issuing no late fees and mailing in movies, Redbox propped up kiosks and stands at fast-food restaurants, grocery stores, and other retail outlets to grab anyone still wanting to rent movies instantly. Unlike Blockbuster’s industrial in-store method of showcasing movies, Redbox has a menu displaying the latest releases of popular movies for $1 a night through these vending machines. This means that Redbox was running their model as if they were an actual store without the substantial costs of maintaining such a large space.
Blockbuster soon went under in 2010 after filing for Chapter 11 bankruptcy, meanwhile Netflix and Redbox were left standing to fill the void and take its place. If as a kid you thought that the Redbox at your local store was similar to Netflix, then you might be right. With its red color scheme and similar marketing strategy, it’s no wonder that many people thought that Redbox and Netflix were one in the same. Redbox took some pages off of Netflix’s playbook and remodeled it to fit their own system. This innovation strategy resulted in Redbox being one of Netflix’s biggest direct competitors.
This leads to today where after 25 years, Netflix had announced an end to their long-coveted DVD rental service. They put a date of September 29 as its last day of mail-in DVD rentals. They continued further with this to say, “After an incredible twenty-five-year run, we’ve made the difficult decision to wind down at the end of September,” the FAQ reads. “Our goal has always been to provide the best service for our members, but as the DVD business continues to shrink, that’s going to become increasingly difficult. Making 2023 our Final Season allows us to maintain our quality of service through the last day and go out on a high note,” via. The Hollywood Reporter.
Since they began to offer their streaming in 2007, Netflix was one of the first pioneers to take advantage of a brand-new way to share movies and TV shows to millions of people. This transition was cemented further in 2012 when they started funding for original series, such as Lilyhammer (2012). After this, they started producing in-house content and created their first original online-only series, House of Cards (2013).
Netflix never turned back from this, and it continues to be one of the top streaming platforms in the world with tons of original shows and movies. But many were surprised that even after this time, they still had their DVD rental business. In 2022, it made $146 million in revenue, which is down $40 million from 2021. In 2023, Q1 summed up $32 million of revenue, which suggests a further decline for DVD rentals, via. The Hollywood Reporter.
From that same article, they cite how Redbox is the biggest DVD rental company in the U.S. In 2023, Redbox has 32,000 red DVD kiosks, more than three times the number of Blockbuster chains at its peak. The company announced plans to add another 1,500 kiosks at Dollar General stores earlier this week. Once the news came out on Tuesday, Redbox CEO Bill Rouhana made a statement to The Hollywood Reporter regarding his interest in acquiring Netflix’s DVD rental business: “I’d like to buy it…I wish Netflix would sell me that business instead of shutting it down.”
For years, Rouhana had made numerous attempts to take Netflix’s DVD mail-in rental service off their hands: “I have tried like three or four times to reach out to the corporate development people about it but just got rebuffed each time…So when I saw it being closed, I thought, ‘Well, maybe they’ll do it now,’” via. The Hollywood Reporter.
As of now, there are no plans on Netflix’s end to facilitate a deal with Rouhana or Redbox. The Hollywood Reporter says a Netflix source came forward providing details that the company is winding down the business and have no plans to sell it. No one knows what might happen to the millions of DVDs that Netflix has stockpiled over the years and other assets associated with that end of the company.
Regardless, Rouhana continues on saying that this will benefit consumers currently interested in renting movies from time to time or watch seldomly, “This could be a great boon to us because now there are a whole bunch of people who are going to look for a new place to get their DVDs, and we’re close to 90 percent of them based on where our kiosks are located,” via. The Hollywood Reporter.
In that article, He finishes off by saying how the DVD rental business is not going anywhere anytime soon.
“We believe in it, and we believe it’s going to be around for a while. Like most legacy things, it’s a lot harder to kill them than people say, I believe.”
As of now, Netflix is at a point where it is redefining what the company operates on and what it wants to achieve. After 13 years since Blockbuster’s recovery became a bust, Netflix had encountered other obstacles, which includes cracking down on password sharing and what might end up being probable WGA strike in May. Hiking its prices also has left sour taste in many people’s mouths as the once loyal fanbase search for other alternatives, such as Prime Video, Amazon’s streaming service launched even before Netflix’s all the way back in 2006. Whatever the case may be, this will mark a new chapter for Netflix going forward as current CEO, Ted Sarandos, says here, “We feel so privileged to have been able to share movie nights with our DVD members for so long, so proud of what our employees achieved and excited to continue pleasing entertainment fans for many more decades to come…To everyone who ever added a DVD to their queue or waited by the mailbox for a red envelope to arrive: thank you.” via. The Hollywood Reporter.