NetflixReed Hastings sits in a cart full of ready-to-ship DVDs on January 29, 2002 in San Jose, California.
Justin Sullivan/Getty Images
On April 18, Netflix announced that it was “sunset” – also known as termination – of its DVD rental option for the material world. The final picture show, in the form of five-inch discs hand-delivered to your door in red envelopes, ends September 29, 2023. After 25 years of mail order, “DVDs are done,” Netflix co-founder Marc Randolph explained and added adds an unsentimental kiss: “Thank you for your service.”
While it was only inevitable that Netflix would live up to the promise embodied in its name, many felt the announcement was yet another death rattle from the sickbed of physical media, that sonorous label for a record album, film reel, or DVD box set that you actually can get your paws on and collect. Increasingly, when it comes to home entertainment, there’s only one way to press play: log in and stream (or download) a digital file.
Netflix’s disc toss appears to be a crucial turning point, as the company’s evolution aligns squarely with the second stage in the evolution of the practicality of watching movies at home. The first stage, of course, was television, which in the immediate postwar period thwarted the Hollywood turmoil. The second phase started with VHS, culminated with DVD and now seems to have ended with digital streaming, and that’s where we all come in.
Introduced in the mid-1970s, VHS (Video Home System) cassettes represented the first major revolution in home entertainment since the television became a living room staple. One way of engaging with the new video technology was to take advantage of the means of production (video cameras and blank tapes) and create do-it-yourself productions that documented weddings, bar mitzvahs, and more; The other way was to let the pros do it and take home a feature film about the new format.
Ironically, the gateway drug wasn’t a commercial movie title, but a fitness regimen. Jane Fonda’s workout. In 1982, the toned actress bought VHS tapes and players what Milton Berle did for televisions in 1949. Fonda’s cassette retailed at $59.95, which was well worth the price for a 90-minute lesson played daily, but the return on investment was less attractive for a feature film watched once or twice: blade runner, Star Trek II: The Wrath of KhanAnd A policeman and a gentleman (all 1982) retail for $39.95; Premium selection like Blown by the wind (1939) and Pinocchio (1940) sold for a shocking $79.95 a sticker. VHS tape prices gradually fell – 1986 top gun retails for $26.95 – but in an era when it was cheaper to take a date with you top gun Instead of purchasing the VHS, many consumers opted for temporary storage rather than permanent ownership.
Although big companies like Hollywood Video and countless corner shops stormed into the rental market, Blockbuster Video Inc. was the iconic and hegemonic offshoot that seems to go down in media history as the village blacksmith and Netflix auto repair shop. Founded in 1985 by Texan oilman David Cook, Blockbuster opened its Dallas flagship store with an inventory of 8,000 VHS and 2,000 Beta cassettes (Betamax was the loser in the decades-long “format wars” and was a superior but short-lived analog device (videotape format from Sony.) Blockbuster specialized in distribution, not sales (“The margins on tape sales are pretty crappy,” Cook said), required no membership fees, and charged $1 to $2 per rental, depending on the title.
The company took off like a rocket. The business model was simple: high footfall, convenient store locations, a wide selection of films with clearly labeled categories, fast computerized checkouts, and after-hours return bins. By 1994, the year Viacom acquired Blockbuster, the company had captured 20 percent of the market. In 1997, the share was 27 percent, three times more than its closest competitor, Hollywood Video.
Members of a certain generation may remember the ritual of making a Friday night pilgrimage to a blockbuster to snag the weekend’s entertainment – the aisles are packed with parents and teenagers digging into the last copy of a hot new release. By 1999, Blockbuster – also known in the industry as “McVideo” – operated approximately 6,500 stores worldwide and served 91 percent of American homes that owned a VHS player, a market penetration almost rivaling that of broadcast television.
In 1997, the introduction of the Digital Versatile (non-Video) Disc threatened to expand, not revolutionize, the video rental market. The first users (including many young men) flocked to the disc. Only two years later, 1999 was celebrated by the trade press as “the year of the DVD”. Fans and techies touted the virtues of DVD’s higher resolution and capacity for additional “extras,” but another quality proved no less transformative: the size of the format, thin and light, easily slipped into a mail slot.
Enter Netflix. In a recent thread on Twitter, Marc Randolph recalled the budding company’s salad days, when co-founder Reed Hastings and himself (“two Silicone Valley freaks”) envisioned a “DVD rental-by-mail idea” that would based on a “no-due” appointments, subscription model with no late fees” and online orders. “It’s definitely not going to replace the video store,” Randolph said billboard in 1998, although he likely already had his sights set on brick-and-mortar competition. (The longer version of the origin story is told in Randolph’s The birth of Netflix and the amazing life of an idea that will never workreleased in 2019, a likely blueprint for a future Ben Affleck-Matt Damon film.)
For $4 per title, the customer purchased a seven-day rental DVD that could be returned with a pre-addressed, pre-paid label. No lugging to a store or making quick decisions before another customer snags your cassette. (Netflix shared an affinity with Blockbuster: It refused to trade in porn, “an absolute no-no,” Randolph noted.)
Netflix thrived until the dot-com bubble burst in 2000 and the company faced cash flow problems. Randolph tells how he and Hastings, desperate for funding, went to Blockbuster to negotiate a partnership. Unable to stop himself from kicking butt at defunct competition, he finds that Blockbuster execs chuckled and passed on the deal.
At this time, the prime shelf space at Blockbuster, which until then had been the privilege of the VHS cassette, was being supplanted by DVDs. “I need a DVD player,” said every Blockbuster customer, looking at the shelves.
Blockbuster was slow to take notice of the warning signs. “The company’s preferred stance – that 70% of US homes live within a 10-minute drive of a Blockbuster store – will not mean much if the user/viewer can stay at home and make his or her choices,” noted industry reporters Denis Seguin in 2000 Screen. It wasn’t until 2003 that the company ventured into online rentals, and by then Netflix was the undisputed Bigfoot. In 2010, Blockbuster filed for bankruptcy. The company’s obituary in The New York Times had a worthy headline diversity: “Why bricks and clicks don’t always go together.”
Now Netflix has shut down the clicks, at least the ones that let a US Postal Service agent call you at your home. But before movie buffs and pack rats get too nostalgic about the end of DVD delivery, they might remember just how limited Netflix choices are. Like Blockbuster, of which there are maybe 100 copies The Blair Witch Project (1999) and not a single silent film, the majority of Netflix’s streaming inventory consists of titles that opened in a 21st-century mall multiplex department store. Author and self-proclaimed “video store vixen” Kate Hagen did the math. “Netflix currently streams about 3,800 movies – less than half of what the average blockbuster used to offer.” (Well, not my blockbuster.) “Only 79 titles of movies made before 1990 are currently streaming. If we go to 1980 or earlier, that drops to 36.”
The bottom line, as always, is that the more a film exists only in the digital realm, the more decisions about availability are in the hands of companies concerned with monetization main criterion for access. From this perspective, the Netflix disc toss could have an archival benefit for the physical media collector: the upcoming scrap sale of used DVDs on eBay.