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Lorrine Hatala
In the land before streaming, there was a time when getting a Netflix DVD in the mail felt magical. Those times have largely passed, and soon the service behind it will end, as we covered in April. But on Monday, Netflix announced that customers can keep any remaining DVDs they have after September 29 once the service shuts down. Additionally, subscribers can potentially get up to 10 discs for free as the service clears out its inventory.
In 1997, Netflix launched as a pay-per-rental service, but it transitioned to the now-famous subscription queue system in 1999, where customers make a list of DVDs they'd like to receive, and they would get shipped out in order as they became available. As we noted in April, this business model partially led to the collapse of video rental chains. While once popular, the world largely moved on to streaming video services, and in April of this year, Netflix announced that it would discontinue its DVD rental service permanently.
For now, DVD.com is still in operation, and it continues the rental queue tradition, but according to its FAQ, the service will ship out its last disc on September 29, 2023. After the final day, it says that customers will not be charged for any unreturned discs and adds, "Please enjoy them for as long as you like! If you do choose to return the disc, we will continue to accept returns until October 27th, 2023."
In addition, Netflix also announced that subscribers can enter for a chance to get up to 10 extra DVDs listed in their rental queue mailed to them for free on the final day of service. With likely millions of discs on hand, we suppose that Netflix's discs have to go somewhere.
If you aren't a subscriber and want to get in on some of the "keepsies" red-envelope DVD action, Netflix says you have until 11:59 pm Pacific Time on August 28 to sign up for a DVD plan. Just remember that the whole thing shuts down for good in September.
You couldn't be more wrong on this, T-Mobile can keep giving it customers what they promised them when they signed up. They'll just have to eat the cost or make a new deal with Netflix. The benefit equates to $15.49 of value for the current one, now it's going to equate to $6.99, how is that not a Downgrade? I to, will be looking at other carriers and plans.
This is unfortunate but I would probably do the same if I was T-Mobile. It will increase profit margins and force people to pay more to get back into the higher tier they were in with Netflix. Although I am not happy about it, it's actually good teamwork between the companies. Personally, I may downgrade my plan and even consider other carriers. In the end I will probably have to choose to either ditch Netflix completely in the very unlikely instance that it reduces plan cost or pay the difference to avoid ads. However, I doubt that T-Mobile will allow the option of my plan without the Netflix with ads for a reduced cost. Let's not pretend that anything is really free. There would be no agreement between T-Mobile and Netflix if it wasn't mutually beneficial and you pay for it even if it isn't shown as a line item.
I'm sorry but if people realized it's actually costing you more do you have T-Mobile on us for Netflix or even Paramount then they wouldn't use those benefits. Because I was grandfathered in under a plan that they no longer have anymore and it was cheaper for me to pay out of pocket for Paramount and Netflix and tell my kids wanted smart watches so then I had to upgrade my plan to the magenta which almost doubled my phone bill so now I'm paying almost $400 a month instead of $150 because of the change in the plans and the additional lines for the smart watches. But also with that we get unlimited data which is the best benefit that is if it would actually work all the time. And also every time I went into upgrade my phones they totally screwed up my account so bad it took me months to get it fixed so when I do decide to upgrade phones again I will be switching from T-Mobile and I've been with them for 13 years. I thought the whole thing would be coming 5G was things worth just get better and possibly a little cheaper but it's only gotten worse and more expensive.
I called in for the third time about this change and asked for a Supervisor to discuss it. I finally got through to a Supervisor, who looked up my account and she said that as I am on the Magenta Max 55+ with 3 lines, my Netflix service is grandfathered in and will not be changed to the one with ads. I asked her to confirm and she put me on hold, came back a couple minutes later and confirmed no change to my Netflix. As this is different from what I was told the last 2 times I called, I supposed I will see what happens over the next day or two when the change is taking place.
Both a movie studio and entertainment platform, Netflix has nearly 140 million subscribers and is the dominant player in the streaming services industry. But few remember that at the height of the recession, it came close to flaming out.
Netflix made a name for itself in 1997 as pioneer of the DVD mail-order business, ultimately helping drive competitors like Blockbuster and Hollywood Video out of business. It was also a first mover in streaming video, taking a chance on its future success in a market now valued at over $22B and growing by leaps and bounds.
People liked the convenience of ordering DVDs by mail and streaming video at home. And with economical subscription bundles and no late fees, Netflix offered good value when consumers were more price conscious than ever. Between 2006 and 2011, its subscriber numbers ballooned 290%, from 6.3 million to 24.6 million.
In July 2011, the company pushed forward with an initiative that made sense in light of its aspirations as a streaming company. First, they announced that Netflix was splitting its plans into two parts: streaming video and DVD rentals.
Those who wanted both streaming and DVDs had to pay 60% more per month. Previously they'd been able to bundle both for just $2 more. Any other time, this might've gone through with mild grumbling. But this wasn't any time. This was a painful, protracted recession.
"Netflix members love watching instantly, but we've come to recognize there is still a very large continuing demand for DVDs by mail," said Andy Rendich, Netflix Chief Service and Operations Officer. "By better reflecting the underlying costs and offering our lowest prices ever for unlimited DVD, we hope to provide a great value to our current and future DVD-by-mail members."
But members weren't buying it. In fact, most saw it as a cash grab, especially since on paper Netflix looked so healthy. Few understood the immense expenditures that were being laid out to keep Netflix on the cutting edge of streaming, including $30M a year to allow Netflix streaming subscribers to access 2,500 movies, TV shows, and concerts from cable channel Starz.
Three months later, Netflix put out an announcement made the situation exponentially worse. The company was now was splitting into two parts. Again, this all made sense in light of Hastings' vision, but it didn't take into account the headaches it created for customers.
The DVD rental side was to be rebranded Qwikster, a name that was widely mocked and compared with Web 1.0 era startups that went belly up, such as Friendster, Napster, and Dogster. For many who were hoping the company would walk back the pricing decision, this was the last straw.
This required that they consider the key factors that would make the journey possible. First, the company needed to show it was listening to its customers. Second, they had to reduce risk by moving fast into streaming video ahead of the competition. Third, they needed to turn the company into a creative force in its own right.
The finance team no doubt knew that with this strategy there would be short-term losses. DVDs had been a profitable business line that had sustained the company since its inception in 1997. Sidelining it would make a serious dent. And finally, the company needed a way to make Netflix a viable alternative to its competitors, including the heavyweights of the industry like HBO.
From a financial perspective, the team saw that removing the legacy part of the business would be the best strategy in the long-term. But it was a delicate balancing act to convince subscribers to move towards streaming. Here's what had to happen:
The team knew that to get out ahead of the competition, it had to be a technology leader. It was one of the to use an algorithm to determine user preferences. Then, Netflix began its moonshot into streaming. This meant:
Despite all this, it meant Netflix perfected the technology ahead of the competition. The company was also growing its user base while its competitors sat on the sidelines waiting for streaming to be ready for prime time.
The company once again had to make a choice. The team had learned that the safest route was to reduce risk by moving faster than the competition. They had to reinvent Netflix as a studio in its own right. And they couldn't afford to back into it. They'd have to go big.
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