Netflix will shut down its DVD rental business in September

After 25 years, Netflix's original business is shutting down. The company has revealed that it will "wind down" DVD rentals (that is. DVD.com), with its last movie discs mailing on September 29th. Simply put, the shrinking demand for physical rentals is making it "increasingly difficult" to offer the quality of service the company wants.

Netflix shipped its first disc (Beetlejuice, if you're curious) in 1998. It has since mailed over 5.2 billion movies in its signature envelopes (nearly all of them before 2019) to more than 40 million customers. You likely know the story after that. The company began streaming on-demand video in 2007, and that business grew quickly enough that it became Netflix's most popular offering by 2009. After a premature attempt to spin off the mailed rentals as Qwikster in 2011, Netflix moved them to DVD.com in 2016. By that point, the company was well into producing original streaming shows and had stopped mailing DVDs on Saturdays.

There's also a financial incentive to drop disc rentals. While Netflix is recovering from a bleak 2022, its profits in the first quarter were still worse than they were a year ago. Subscriber growth was relatively modest, too, at 1.7 million new users. A decision to axe the DVD-by-mail unit could help Netflix trim costs, even if the savings are relatively small. The disc market has been on a sharp and steady decline for years, according to VideoScan/MediaPlayNews data — sales alone dropped 19 percent from 2021 to 2022.

It's nonetheless a sad moment for home video fans. Netflix played a major role in shaking up the movie rental business. Where retailers like Blockbuster dominated in the 1990s and early 2000s, Netflix helped people stay at home. Blockbuster and other rivals hopped into the market years later but fought to gain traction. While retail rentals are still available through Redbox kiosks and similar options, it's safe to say Netflix changed expectations for good.