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[Chris Richard]

Netflix ended March with 232.5 million worldwide subscribers to its video streaming service, but it stopped disclosing how many people still pay for DVD-by-mail delivery years ago as that part of its business steadily shrank. The DVD service generated $145.7 million in revenue last year, which translated into somewhere between 1.1 million and 1.3 million subscribers, based on the average prices paid by customers.

The growth of Netflix's video streaming service has been slowing down over the past year, prompting management to put more emphasis on boosting profits. That focus may have also contributed to the decision to close an operation that was becoming a financial drain.

Shortly before Netflix broke it off from video streaming in 2011, the DVD-by-mail service boasted more than 16 million subscribers. That number has steadily dwindled and the service's eventual demise became apparent as the idea of waiting for the U.S. Postal Service to deliver entertainment became woefully outdated.

But the DVD-by-mail service still has die-hard fans who continue to subscribe because they treasure finding obscure movies that are aren't widely available on video streaming. Many subscribers still wax nostalgic about opening their mailbox and seeing the familiar red-and-white envelopes awaiting them instead of junk mail and a stack of bills.

The service's history dates back to 1997 when Netflix co-founder Marc Randolph went to a post office in Santa Cruz, California, to mail a Patsy Cline compact disc to his friend and fellow co-founder Reed Hastings. Randolph, Netflix's original CEO, wanted to test whether a disc could be delivered through the U.S. Postal Service without being damaged, hoping eventually to do the same thing with the still-new format that became the DVD.

The Patsy Cline CD arrived at Hastings' home unblemished, prompting the duo in 1998 to launch a DVD-by-mail rental website that they always knew would be supplanted by even more convenient technology.

"It was planned obsolescence, but our bet was that it would take longer for it to happen than most people thought at the time," Randolph said in an interview with The Associated Press last year across the street from the Santa Cruz post office where he mailed the Patsy Cline CD. Hastings replaced Randolph as Netflix's CEO a few years after its inception, a job he didn't relinquish until stepping down in January.

Even subscribers who remain loyal to the DVD service could see the end coming as they noticed the shrinking selection in a library that once boasted more than 100,000 titles. Some customers also have reported having to wait longer for discs to be delivered as Netflix closed dozens of DVD distribution centers with the shift to streaming.

"On September 29th, 2023, we will send out the last red envelope," Netflix said in a tweet on Twitter. "It has been a true pleasure and honor to deliver movie nights to our wonderful members for 25 years. Thank you for being part of this incredible journey, including this final season of red envelopes."

"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," Sarandos said. "To everyone who ever added a DVD to their queue or waited by the mailbox for a red envelope to arrive: thank you."

The problem with investing is that, done right, it's not all that much fun. It requires virtues for which you will probably be rewarded in heaven but which won't provide you and your friends with much entertainment on earth: equanimity, restraint, moderation, discipline.

The best way to understand investing is as a means to an end, a road to a destination -- a comfortable and productive retirement, a new house, college for the kids, a trip around the world. Most of the time, it's the end that provides the pleasure, but there are ways to derive some joy in the journey. One is to take a flier. Invest in ideas that strike you as altogether wonderful. In other words, feel free -- with constraints I will explain -- to fall in love with a stock.

That's what I do every year or two. It happened this spring with Netflix (NFLX), a company that rents DVDs of old and new movies. I read about Netflix -- I still don't remember where -- and realized at once that it was a brilliant idea. You pay a flat fee of $20 a month to rent all the movies you want from a library of 15,000 titles. You order on the Netflix Web site, and movies are sent, in DVD form, by first-class mail. You can keep three movies out at a time and return them at your leisure in a postpaid envelope. There are no late fees, but there's a strong incentive to return the movie because when you send it back, Netflix sends you the next one on your online wish list. Of course, a brilliant idea does not necessarily make a brilliant business. Could this company make money? It was not hard to find out. The business was absurdly and elegantly simple: one product at one price. This was no General Electric or Cisco Systems. To determine how profitable Netflix would be, you had to make a guess about how many Americans would sign up for the service. A quick look at the financial statements showed that with a little over 1 million subscribers, Netflix should be breaking even. At 2 million, it should be making a nice piece of change.

Before I bought the stock, however, I wanted to try the product. I purchased a subscription to test the service. It worked as advertised. Within two days after sending back a DVD, I got a new one. The site itself was easy to navigate, and, like Amazon, it made suggestions for movies based on my previous choices.

There were, however, risks. Competitors emerged -- giant retailers like Wal-Mart (WMT) and movie-rental chains like Blockbuster (BBI). Cable and satellite will almost certainly become more aggressive in marketing video on demand. Broadband will spread, and Web sites will offer easy downloads of the latest hits. All true, but Netflix, meanwhile, was out in front, building a brand, and the company could become very profitable with only minor market penetration.

What's difficult about fliers is deciding when -- and if -- to sell. Fliers can develop into buy-and-hold stocks, but they don't start out that way. The default position is to get in and out quickly. A good rule is to sell a flier that does not fly within a year. But that's the easy part. What happens if a flier really takes off?

What to do? I had three choices: 1) sell the stock, offsetting the gain with certain losses that I had in my portfolio so that I wouldn't have to suffer adverse tax consequences, 2) hang on for the long term, with the understanding that shares, now trading at a price-to-earnings ratio, according to Yahoo Finance, of 9,700, were likely to take a dive, at least temporarily, or 3) effect a combination of the first two alternatives.

Fliers don't get better than Netflix, and, the law of averages being what it is, I don't expect many winners of this sort. But I keep searching -- in newsletters, at malls, in articles in the mainstream press. Here are some potential winners -- with a strong warning to do your own research and realize that the risks are very high:

The curtain is finally coming down on Netflix's once-iconic DVD-by-mail service, a quarter century after two Silicon Valley entrepreneurs came up with a concept that obliterated Blockbuster video stores while providing a springboard into video streaming that has transformed entertainment.

The DVD service that has been steadily shrinking in the shadow of Netflix's video streaming service will shut down after its five remaining distribution centers in California, Texas, Georgia and New Jersey mail out their final discs Friday.

"It's sad," longtime Netflix DVD subscriber Amanda Konkle said Thursday as she waited the arrival for her final disc, "The Nightcomers," a 1971 British horror film featuring Marlon Brando. "It's makes me feel nostalgic. Getting these DVDs has been part of my routine for decades."

Some of the remaining DVD diehards will get up to 10 discs as a going away present to loyal customers such as Konkle, 41, who has watched more than 900 titles since signing up for the service in 2006. In hopes of being picked for the 10 DVD giveaway, Konkle set up her queue to highlight for more movies starring Brando and older films that are difficult to find on streaming.

At its peak, the DVD boasted more than 20 million subscribers who could choose from more than 100,000 titles stocked in the Netflix library. But in 2011, Netflix made the pivotal decision to separate the DVD side business from a streaming business that now boasts 238 million worldwide subscribers and generated $31.5 billion in revenue year.

The DVD service, in contrast, brought in just $146 million in revenue last year, making its eventual closure inevitable against a backdrop of stiffening competition in video streaming that has forced Netflix to whittle expenses to boost its profits.

"It is very bittersweet," said Marc Randolph, Netflix's CEO when the company shipped its first DVD, "Beetlejuice," in April 1998. "We knew this day was coming, but the miraculous thing is that it didn't come 15 years ago."

In 1997, DVDs were so hard to find that when they decided to test whether a disc could make it thorough the U.S. Postal Service that Randolph wound up slipping a CD containing Patsy Cline's greatest hits into a pink envelope and dropping it in the mail to Hastings from the Santa Cruz, California, post office.

Netflix quickly built a base of loyal movie fans while relying on a then-novel monthly subscription model that allowed customers to keep discs for as long as they wanted without facing the late fees that Blockbuster imposed for tardy returns. Renting DVDs through the mail became so popular that Netflix once ranked as the U.S. Postal Service's fifth largest customer while mailing millions of discs each week from nearly 60 U.S. distribution centers at its peak.

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