Netflix & End of DVDs?

Simon Tran

It was only two years ago that Netflix was the dominating movie rental franchise people used on a daily basis. In 2011, Netflix had a mighty 25 million subscriber count, but in the same year, lost an unexpected 810,000 subscribers.

One reason for customer loss was Netflix’s decision to suddenly and dramatically increase its charging price. In July of 2011, Netflix changed what most considered a flawless business plan by raising the monthly fee. Subscribers soon (and angrily) learned that they would have to pay almost double the amount for both streaming and rental privileges.

From Netflix’s start in 1997, most households were accustomed to the trip to the movie rental store for home cinema entertainment. Business such as Blockbuster and Hollywood Video were very popular then, too. Video streaming was almost unheard of until 2002, when YouTube and Netflix streaming were founded.

Netflix became very successful because it was much different than Blockbuster or Hollywood Video, Netflix was simply more convenient for consumers to rent DVD’s.  Families (parents) could now avoid the unlikable movie store and late fees. Netflix allowed customers to rent unlimited DVD’s for a small monthly cost. When movie rental stores began to go under, Netflix was America’s first choice for the home movie.

But now a question remains: Is renting DVD’s relevant? Although Netflix offers 100,000 DVD rental choices and 20,000 streaming choices, it is surprising that most customers are using streaming over DVD’s.

Others argue that Netflix’s DVD rental is in fact as popular as ever, because Netflix is now the only main provider of DVD rentals today. Although Netflix did lose a substantial amount of customers in 2011, it only lost 500,000 customers for the DVD rental demographic, leaving over 24 million people still subscribed.

However, that customer count is now in danger of more than customer price dissatisfaction. Redbox, the quick, vender type DVD provider, is more popular than ever, threatening Netflix’s domination in the DVD rental field. With Redbox, for about $1, people can go to stores to conveniently pick up new release movies for as long as they want, something Netflix doesn’t offer.  With Netflix it takes some months to update its movie catalogue for “new movies”, whereas Redbox is constantly updated with the films every week. In 2011 Redbox sales jumped 73%. With 8700 kiosks, Redbox seems to be the new Netflix.

Streaming is a much more convenient method of getting video entertainment. With Hulu, Amazon, and other streaming sites, it seems as though movie and television viewers are moving away from a movie box to a movie clip. Although Netflix accounts for 20% of all movie streaming, other companies, especially Hulu, are used much more frequently than actual DVD’s. Streaming activity shot up 650% in just 2010 alone.

It’s not surprise that streaming is the new method of home entertainment. Netflix seemed to see this too; that is why Netflix’s new business plan consists of separate choices of paying for streaming or DVD renting; or you can pay two fees for both. Netflix users can either stream or rent but not both. It seems as though as streaming becomes more relevant and more widely used, renting DVD’s isn’t as lucrative as it was five years ago. Senior Tiffany Lloyd commented how, “Netflix is declining. Quality of [streaming] videos suck, [and] its way too expensive…”.

With the continuing success of streaming, thanks to the innovations of more convenient streaming on computers, tabloids, iPads, and Smartphones, it seems as though Netflix will have no choice but to raise cost to compensate for revenue loss. With advances in technology comes more convenience to stream. Who knows- ten years in the future DVD’s might be the forgotten movie disk of the past.