Remember when movies were delivered by mail?
Jandy Hardesty, who blogs about movies at Row Three, shared an article about Netflix’s latest earnings report. While the entire company is doing well, with more online subscribers than HBO, one of Netflix’s lines of businesses is declining. The Dissolve references a GigaOM post:
Around seven million customers still pay Netflix to send them DVDs of movies and TV shows via mail. Two years ago, that number was twice as high. Fast forward another two years, and there could be around four million customers left who get their red envelopes from Netflix. Or maybe even less.
While part of the damage was self-imposed by Netflix’s missteps a few years ago, there is clearly less demand for waiting a few days to get a DVD in the mail. So Netflix has downsized:
A Netflix spokesperson recently told the Montana Standard that it was closing “a handful” of its DVD distribution centers, with its facility in Butte, Mt. being one of them. According to the story, Netflix still maintains 39 distribution centers nationwide….Previously, Netflix operated as many as 58 distribution centers.
GigaOM points out two additional factors: the rise in postal rates this January, and the content industry’s move to discourage cheap rentals.
While GigaOM and The Dissolve point out all of the reasons why Netflix may get out of the business sooner rather than later, there is one thing that may discourage them from doing so. I previously mentioned the unpleasantness a few years ago when Netflix unbundled streaming and mail rentals, and initially planned to move the DVD by mail part to a separate company called Qwikster; while memories have faded, Netflix got a ton of negative press at the time. Netflix doesn’t want to go through that again, and may wait as long as possible before killing the DVD by mail business.