Netflix To End DVD Rentals As Streaming Fails To Live Up To Its Full Potential
from the meet-the-new-boss dept
Netflix executives this week announced that they would finally be putting their traditional DVD rental service out to pasture starting on September 25 after 25 years of little, red envelopes. From a blog post by Netflix co-CEO Ted Serandos’ intern:
Our goal has always been to provide the best service for our members but as the business continues to shrink that’s going to become increasingly difficult.
You might recall that the last time Netflix tried to slowly back away from the traditional DVD rental service, it didn’t go so well. In 2011, the company prematurely attempted to separate its streaming and DVD rental services into two companies, with the new DVD arm named Qwikster. The effort saw major customer backlash (in part due to price increases) and was doomed from the start.
The death of Netflix’s mail delivery DVD business is anything but surprising. That said, streaming as a fully symmetrical replacement for traditional rentals hasn’t quite lived up to its full promise. As some were quick to note on social media, Netflix’s ever-shrinking streaming catalog can’t hold a candle to the DVD-era’s original selection of content, especially when it comes to older titles:
Problematic, especially given the ongoing, multi-front war against libraries.
There’s of course additional trouble in paradise. Netflix, now seeing slower growth internationally, has, in recent years, pivoted to more intensely nickel-and-diming its customers to appease Wall Street’s unyielding demand for improved quarterly returns at any cost.
That has included not just a more streamlined, sometimes lower quality catalog, but consistent, monthly price increases. Then there’s Netflix’s clumsy efforts to crack down on password sharing, a phenomenon Netflix whole-heartedly embraced when it was a pesky, disruptive upstart.
Netflix’s policy and politics have also shifted for the worse. The company that once fought for popular issues like net neutrality ultimately sold those principles down river once it itself became massive and politically powerful, leaving activists and consumers to fend for themselves. (That’s proving problematic now that the EU is considering a telecom-backed tax on Big Tech).
Elsewhere in the streaming sector we’re watching as mindless consolidation results in streaming empires that are keen on constantly raising consumer prices, yet somehow too cheap to pay artists’ residuals or employees, resulting in both layoffs and streaming catalogs with giant holes that didn’t exist in the traditional DVD era.
The whims of the DRM era also mean you don’t own what you buy, and Wall Street pressure has a lot of modern streaming companies now acting and sounding a lot like the widely despised cable TV giants they once disrupted.
None of that’s to say that streaming hasn’t been hugely innovative and more convenient, but greed, incompetence, and an all pervasive “growth for growth’s sake” mindset have certainly muted the technology’s full potential.
Filed Under: blockbuster rentals, dvds, evolution, net neutrality, netflix DVD, streaming, tv, video
Companies: netflix
Comments on “Netflix To End DVD Rentals As Streaming Fails To Live Up To Its Full Potential”
What’s Netflix going to do with all of their DVDs, and can I buy them?
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yeah, i hope they don’t just put ’em in an arizona landfill!
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Well, Chicken Soup for the Soul Entertainment has expressed interest in buying Netflix’s DVD business to boost Redbox’s. Netflix has suggested it only plans to shut down the DVD business, but whether that’s a means to get CSSE to give them a decent asking price is uncertain.
(Story from The Streamable: https://thestreamable.com/news/redbox-chicken-soup-for-the-soul-entertainment-expresses-interest-in-netflixs-dvd-business)
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Makes sense.
One thing missing from the article I think is just the nature of physical vs. streaming. With physical rental, it depends on the first sale doctrine, and the nature of licences is that they are applied when the disc is pressed. With digital content, the renter has to have a valid licence for the content themselves, and it’s applied when the customer requests the stream.
What this means in practice is that the disc service doesn’t have to get permission from a studio before they can rent a title – if it’s on disc, they buy it then they can rent it. For older titles, it also doesn’t matter – if the disc goes out of print or even the studio goes out of business, they can continue to rent it out as long as the disc is physically capable of being played. There’s bound to be a lot of choice lost when you’re looking at a fragmented market as we are now, where older titles may never get licenced and popular titles play leapfrog between services.
But, also, I have to say it’s not all bad. Netflix is vastly larger and more successful than they ever could have been as a physical only service, with region coding and shipping costs being unavoidable roadblocks to international expansion. Then, for the customer instead of getting a couple of movies a week you can watch as much as you like, and everyone’s relatively well catered to under one subscription if you live in a household with differing tastes.
On another note, I’d like to say that the older catalogue issue mentioned doesn’t seem to be as much of a problem in Europe as it is in the US. I’ve noticed a lot of older movies being added over the last couple of years, and if the Justwatch search is correct there’s currently 715 films made before 1990 available on Netflix https://www.justwatch.com/es/proveedor/netflix/peliculas?release_year_until=1990
They’re certainly not all blockbusters (though there are a few), and I do wonder how much of this is due to general licencing nonsense, and how much is because Netflix didn’t bother with older titles as much in the US because they had the DVD service to fall back on. Also, there’s probably just a skewing toward certain services for back catalogue stuff in general – for example, the US has the Criterion Channel to stream with, so why would Netflix battle for the older niche content when there’s already an entire competitor doing that part better? It’s frustrating to chase multiple services for everything you need, but I’d rather services find their own niches like that than them trying to outbid each other for random exclusives.
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“Renter” is an ambiguous term here. It’s the entity making the copy that needs the licence; that is, the service renting it out to customers, not the customers themselves.
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Yes, you’re right, it’s the provider not the user. Netflix/Blockbuster don’t need a licence to rent you a DVD they have on their shelves, but they do need to pass another licence check even if they rented the movie digitally to someone else 30 seconds ago.
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And, not for nothin’, discs don’t last forever and they’re not being produced in anything like the quantities they used to be. This isn’t just about demand, it’s also about supply.
Sure, there are still movies that are available on physical media and not streaming. But the number’s shrinking all the time. (More’s the pity, I say as somebody who still likes physical media.)
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Very true, but while discs still exist then the company renting the disc have the option to procure more through other means, they don’t have to depend on buying directly from the distributor. The move away from physical media does mean some titles are unavailable, but many older titles are also experiencing their first physical releases since the VHS days as boutique labels are focussing more on small runs of sought-after titles rather than it mainly being studios product 100k copies of the latest blockbuster.
Ultimately, this is another issue where the move to newer tech has advantages and disadvantages. I can watch way more via the Netflix model than I could afford to watch if I were spending $5-10 to rent each individual title as we would have done pre-Netflix. But, it may be more difficult to access an individual title I’m looking for than it would have been to just go to Blockbuster (depending on your tastes of course, if you always found what you were looking for at Blockbuster you probably had way less eclectic and obscure tastes than me).
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“eclectic and obscure”
That could be a fun ‘war’ to get into, who can out ‘eclectic and obscure’ who. Add ‘outré” and it would be even more fun. Dig deep into Ingmar Bergman or Kurosawa, or Fritz Lang, or more like early Stephen Chow or even John Waters, or … The whole business model is unfortunate, well, to me it just sucks. While ‘streaming’ seems to be accepted as normal, I still have a hard time understanding what the term really means. If I’m using Potplayer to play a file on my local HD, is that streaming? What if the file is actually on a networked disk? I’ve seen the term used for both.
Which is why “while discs still exist” bothers me, why should that be a problem? One reason streaming from the usual suspects REALLY sucks is the player apps as I mentioned in a post below. I don’t know for sure but I’d bet most of the reasons these apps suck is due to the mechanisms used to satisfy DRM and the paranoia of pirating that make simple actions like pausing and restarting something that can take seconds, or the impossibility of simply backing up a few frames or frame stepping. You don’t need actual disks to rent movies, ISOs would be far better. Bluray players can play video files, there’s no reason they couldn’t play ISOs. For the ‘eclectic and obscure’ inclined, or for the more ravenous than one can afford, these can be found in certain places in ISO format and DRM free to boot. It’s a shame someone like Blockbuster didn’t figure out a way to rent disks in this manner,
Another reason streaming sucks is how you can never really know what you’re getting, what quality is actually being delivered as that can be downgraded at any time, or what version of a title they’re offering. An egregious example of the latter is the series “Utopia”, a brilliant British show that if streamed on Amazon, they’re a few bits edited out. That’s an obscenity, as much a one as Amazon’s remake of the series, something most ‘eclectic and obscure’ types probably appreciate. I’ve repeatedly tried to figure out such things before deciding to stream a title and it’s never there. Maybe Criterion is better, I don’t subscribe but it doesn’t look like it. If you could rent ISOs of disks that were sold as disks, you would at least know a lot more about what you’re getting, wrt both content and quality.
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” Dig deep into Ingmar Bergman or Kurosawa, or Fritz Lang, or more like early Stephen Chow or even John Waters, or …”
I wouldn’t say those were obscure, for the most part. Some are very easy to get hold of (for example, most of Kurosawa’s early work is on Plex), others easier to get hold of on disc than streaming, while I think there’s a bunch of early Chow that never got a real release in the West on any format.
“The whole business model is unfortunate, well, to me it just sucks”
Such as it’s always been. The whole distribution model is largely based upon carving the world up into regions and selling the rights to those regions in different ways to maximise profits. That dates back to before home video, let alone streaming. This is one of the reason why Netflix pushed so hard for their own productions – they can get worldwide (or near as possible to it) rights up front, rather than having to deal with potentially dozens of different distributors with different costs, terms, etc. who can pull the licence later on.
“While ‘streaming’ seems to be accepted as normal, I still have a hard time understanding what the term really means.”
It just means that you’re streaming the file from another location rather than storing it locally (which you do if you download it first). Streaming from a remote disc on your local network is technically the same as if you’re streaming it from Netflix’s servers, apart from the fact that you don’t have a full copy of the original.
“You don’t need actual disks to rent movies, ISOs would be far better”
Yes, but you see the problem then becomes licencing. If you have the original disc, the first sale doctrine applies, and you can do whatever you want with your physical disc. Which includes lending or renting it out as much as it means you can use it as a coaster. But, once you extract the actual data you run into two problems. One is that you have to bypass DRM in order to do that, which is still technically illegal in many places, although there’s often an exception for personal use.
The other problem should be obvious – you don’t have a distribution licence for the data on the disc outside of the physical disc itself. If Netflix were to extract the ISO and they don’t have a licence for the movie, they’d be guilty of piracy as much as you would be if you send it to people via torrent or download. If they do have a licence, the way they current distribute the movie is better than if you’re trying to stream the full ISO file.
As ever, the problem is licencing. The technical aspect has been worked out a long time ago. The issues are purely legal and financial. The bottom line is that you can’t offer a film if you don’t have a valid licence for it from the copyright owner. With discs, the licence check happens when the disc is pressed. With streaming, the licence is checked when you try to stream it. They can’t offer you something they don’t have a licence for, and there’s no licence available that covers everything.
“Maybe Criterion is better, I don’t subscribe but it doesn’t look like it”
Criterion are very famous for quality control and taking great care with their catalogue, both with discs and with streaming. I’ve heard various stories about other services. Some will be very serious about quality control because they’re focussing on a niche market anyway (Arrow, Shudder, Vinegar Syndrome, etc.). Other will just take anything in whatever state (Prime do this, I believe, which is why there can be multiple different versions of public domain films of varying quality).
But, that also applies to physical media. If you’re buying a nice 2 disc collectors’ edition of a movie you’re going to get a different experience to if you buy a 50 film box set for $20. The only real answer is to support the people doing the good work of tracking down and cleaning up more obscure content, and that might take more effort than just using one service.
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Not really “unavoidable”, just somewhat costly. They’d want to build international warehouses to save on shipping and to have locally appropriate products (in terms of region-locking, sure, but also dubbing/subtitling which is still needed for streaming).
I don’t see what would’ve stopped them from selling and shipping region-free players to people either. The movie companies would sometimes revoke the keys of those players, but they tended to work for quite a while and were easily found (as regular mass-market products) in many parts of the world—in fact, they were legally required in some countries where region code enforcement was considered illegal (such as Hong Kong, Australia, and New Zealand). And USB DVD drives eventually got so cheap that it would’ve been easy enough to buy one for each of the 6 common regions.
Anyway, de facto “region coding” still exists because streaming contracts limit the regions where things can be streamed. You may not have noticed that if you’re in the USA, but many foreigners have.
That’s not at all impressive. I just searched my computer and found about 1500 pre-1990 films (90% of them from after 1940, so not just public domain stuff). They’re mostly popular movies with high ratings; a connoisseur looking for more obscure films will probably be shit outta luck with streaming services.
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“Not really “unavoidable”, just somewhat costly”
Extraordinarily costly for numerous reasons, and Netflix already had numerous competitors imitating their model in most major markets. It probably wouldn’t have been worth trying to expand globally, unless they made specific rebranding deals with local providers.
“I don’t see what would’ve stopped them from selling and shipping region-free players to people either.”
The studios would not have been happy about that, and the mainstream market for the most part didn’t care. There was a spike of interest in region-free players in the UK when DVDs were relatively new, as the UK discs were often relatively barebones compared to the US releases, but for the most part people wanting to access blockbuster level movies wouldn’t be buying new players for it.
“Anyway, de facto “region coding” still exists because streaming contracts limit the regions where things can be streamed. You may not have noticed that if you’re in the USA, but many foreigners have.”
Oh, I’m based in Spain but hate dubbing and prefer anything in the original language, so I’m constantly chasing around copies of movies with the correct combination of original language and English sub (I’m quite proficient in Spanish, but I’d rather not be translating in my head as I’ve listing to a Korean dialogue, for example). One bane of mine in regards to that is indeed that instead of region 2 for DVD, they try to pretend Europe is now a bunch of competing regions. But, I’m not sure that a combination of subscriptions and VPN is more difficult than importing the correct version of a disc, since the required language options (and extras I want to watch) might not be sold locally.
“That’s not at all impressive”
I didn’t say it was impressive, I said that it’s much larger than the US version. A difference possible explained by the fact that services like Criterion and Tubi already have a lot more films made before 1990, but largely don’t operate outside of North America and the UK.
I can understand the concern about retaining access to older movies, it’s just misleading to say there’s an overall problem because Netflix specifically don’t have a lot of them. It was a more valid criticism when Netflix was the only game in town, and it’s certainly annoying to have to search for where a movie is, but the complaint that Netflix only has 36 pre-1980 movies rings hollow in a market where (as a quick check via Justwatch) Tubi has 3965 and Criterion has 1552.
“a connoisseur looking for more obscure films will probably be shit outta luck with streaming services”
That very much depends on the title. Services like Justwatch do make it fairly easy to track down where a title is available, while if you just want to view a movie there’s a lot of random content available on the likes of YouTube for free. I’m subbed to entire channels that deal with old and obscure horror, giallo, eurocrime, etc. movies, many of which never got a UK release at the time so I actually have more access to those than when I would have to have imported an expensive disc from elsewhere. It might get legally more questionable once you stray away from the official streamers, but as I say I’m often talking about movies that never got a DVD release anyway, so the point is moot when talking about DVD vs streaming.
It’s the enshittification of yet another platform consumers used to love. Venture capitalists never learn.
Nobody cares about physical media. It contains no discernible advantage for 99% of users. Let it go.
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There are a bunch of advantages, but they’re all bullshit related to legal systems. Notably, anyone who owns physical media can legally loan or rent it to others in the USA. It’s still totally inferior to a proper rip, but those are not legal to copy, and that’s why streaming services have so little selection compared to traditional video stores: they have to negotiate for every single movie they want to stream, and it’s just not worth it for an old movie. A video store owner, by contrast, could just buy a box of old movies from an estate sale or wherever, and rent them out.
(“Controlled digital lending”, better known as DRM, should not be accepted as a replacement for physical lending, or for any other purpose. Copyright needs to just be abolished.)
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Physical media ABSOLUTELY matters. In a digital only future, you the customer are at the whims of the service and the studios and you don’t own what you buy.
Physical means you can do what you want with it, you paid for and own it.
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None of those things are really advantages of physical media per se. They’re just disadvantages of the legal regimes surrounding digital copies of copyrighted products.
Physical media is a workaround, not a proper solution.
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I like your framing. However, even though the advantages are really workarounds to disadvantages, that’s reason to care about physcial media
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Yes and no…
We should care about the rights that have long been associated with physical media. But the fragile little discs storing mere gigabytes of data? Not so much.
If people get the message that physicality is what we care about, they’ll have gotten the wrong message. Remember the original DIVX? It had that. Even normal DVDs and Blu-Rays use DRM to abuse their users, particularly via region coding and by making backups difficult. A library should be able to loan me a USB disk with several thousand movies; maybe I feel like borrowing 1993 today.
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Woah! Someone has a chip off their shoulder.
Anyway, if physical media had “no discernible advantage for 99% of users” then Netflix wouldn’t end DVD rentals in an attempt to bolster its streaming service. And just because you don’t find physical media useful doesn’t mean that other people don’t find it useful either. The article mentioned an advantage: some films are only available via physical media. Additionally, a DVD lets you watch a movie in higher quality if your internet service is bad.
Since there’s a chance that you were referring to physical media in general rather than just to DVD rentals, I’ll also mention that non-rented, non-DRMed physical media falls under the first-sale doctrine, can be format-shifted for personal use and personal preservation, and can’t be taken away from you by the copyright holder or seller at any time.
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Is there evidence of this? My understanding was that most of the DVD customers were using the service due to a lack of good broadband access (either they can’t get it or don’t have the computer skills to figure it out), so they’re not gonna become streaming subscribers. And, sure, there’s gonna be a small group of film buffs using it because of the greater selection. Why would they switch if they can’t get what they want?
Would the DVD-mailing group even be large enough to “bolster [the] streaming service” if they all switched? I’m guessing Netflix just don’t find it profitable enough to continue buying DVDs, paying people to deal with the postal logistics, etc.
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Good points. I retract my claims about Netflix’s motivations.
And admittedly, the advantages of physical DVD rentals over subscription streaming are unlikely to apply to most people who can afford to stream. (That’s why I prefer buying over renting.)
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99% of streaming-only customers. Everyone else who can’t even get reliable and decent broadband, or who want something beyond the awful streaming catalogue, like their DVDs.
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Ownership over Tenancy. I think there’s definitely an advantage over paying for something to keep for yourself and have more freedoms with rather than continuously paying money to access something you don’t own and can’t control.
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Then give me any and all your DVDs, VHS tapes, CDs, reel-to-reel audio tapes, cassette tapes, vinyl LPs… I love physical media, and if you don’t care for it, I’ll gladly take it all off your hands. I won’t even charge you for the removal service.
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“Nobody cares about physical media”
Demonstrably false. It might not be as mainstream as it once was, but there are numerous companies making a very good living by selling it, some of whom didn’t exist until after streaming became mainstream.
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People ignore that there are still new VHS releases each year.
Why can’t we just dig out and soak in a barrel of roundup the root of this and every other problem?
I’m talking about Wallstreet.
What actual good does it do today compared to it’s original mandate?
Please don’t stop mail DVD
I live i a area where streaming is not available. Since you started dvd mail delivery I have been a customer. Waiting for a movie to come in the mail weekly. And now have two subscriptions. Two a week. This was something I look forward to every week for years …….now 80 years old you tell me you quit. So disappointed to see this come to a end. Can’t you reconsider this. I am sure I am not the only one of your many faith full customers who depend on mail dvd delivery.
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Hon, you’re not on Netflix’s website. This is just an article reporting on Netflix’s decision. Your comments will have no influence on Netflix because it will never see them.
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“Can’t you reconsider this”
Techdirt? No. If you were to contact Netflix and express your dissatisfaction and enough people join you then maybe they will, but I’m sure they have already made the decision based on their costs vs profit.
Please don’t stop DVD mail delivery
I live in a area where streaming is not available. I have been a customer since you started your mail In delivery. I looked forward to receiving a physical DVD to watch every week. So much that I have two subscriptions. The news to stop mail in delivery has really upset me.
None of the streaming services that I’ve used spend any appreciable amount on developing a decent app and it’s effing infuriating. They’re all glitchy, all slow, all offer really pathetic controls. The resources needed to develop a really killer app can’t be significant for most of these companies, why would they not do this as a way to distinguish their product in an increasingly competitive and crowded market is beyond me.
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You missed the story
We’ll start with the pink elephant. Streaming consolidation of s something many consumers demand. Ruth now there’s still too many choices. And while most brands have consolidated under channel hosts (eg Prime Video) there are still dozens of holdouts.
The only way cord cutting will ever be complete is if we have enough consolidation, AND umbrella services.
Netflix has a problem. As a first year user and a stock holder, I see that clearly.
The problem is too much stock is held by big money investors. Netflix has lost its way.
Let’s look at some actual stats. Netflix may have gradually (and that’s well documented, gradually) lost dvd subscribers, the service is still healthy and strong. Subscriptions aren’t the issue. It’s the cost of postage. The rise in shipping costs has driven the percentage rate of profit down below what the greedy bastards are content with.
The issue here, is like Game Stop, AMD, and other hard loyalty brands, the loyalists don’t have enough stock to drive the company. One thing the big dish miss, is how many DVD members are streaming members. For. Ow their national distribution of not really exclusive “exclusives” will hold them. For now. But even these are not as exclusive as they pretend; as the public thinks. Especially the collection of foreign content. There are plenty of foreign services willing to serve the US market with US credit and US addresses, no VPN needed. Serving the same material,
Often at a lower price.
.
Netflix still holds one of the largest libraries of DVDs in the world.
This is a loss to society. It could also be the start of the end of Netflix.
It’s time to partner with Amazon, past time. The company is just one bad decision away from being purchased and gutted.
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