Where can one even begin with the Netflix library? From the endless categories to the secret codes and back again, Netflix’s online roster of film and television content is so large that a whole person could devote her life to watching every title in the database and she would still come out far short of the total number.
Like a hydra splitting its head, Netflix continues to add titles to its lineup every month (it does subtract some, too). This means that whatever one thinks she knows about Netflix’s library might end up not being true in a month, a week, or even a day. Moreover, when one speaks of Netflix’s library, it is key to remember that there are two Netflix libraries: (1) titles available on DVD by mail and (2) titles available for streaming online. The former is what launched Netflix back in 1997; for a long time, Netflix was known as a mail-order DVD rental service.
With the rise of streaming Netflix found a new business model to add on to its successful mail service, and since then Netflix has started tackling plans far bigger than mail-order or streaming. The Guardian‘s Jasper Jackson predicts that Netflix’s next goal is to become “a global TV network.” Such lofty goals sound appealing, but in thinking of those goals one can’t help but wonder what the future plans for Netflix’s DVD movies rental list will be, in addition to Netflix’s libraries as a whole.
The Decline of Physical DVD Rentals
Streaming’s quick rise to international prominence did not immediately spell the doom of the DVD movies list on Netflix. In 2013 — the same year Netflix debuted its first original show via its streaming service, House of Cards — Netflix’s DVD rental service was still more valuable than the streaming service. The likelihood of that remaining the case is not high, but it is enough to say that, for at least a good while, streaming was not a guillotine blade coming down to chop DVD rentals off at the head. Certain choices of Netflix’s, especially making the price of DVD rental plans higher than the much more accessible streaming services, do point toward a way forward for the company that is less likely to involve physical distribution of movie and TV titles. The reality of consumer interest is reflecting this decline in DVD rentals as well. The graph below from Statista illustrates the clear decline in DVD rental subscriptions to Netflix:
Over the course of just five years, Netflix’s pioneering DVD-by-mail subscription model lost nearly ten million customers. This drop-off in DVD-by-mail subscribers happened not long after the warning signs of the demise of the physical rental industry. In 2010, Blockbuster — for a long time the giant of DVD rentals — declared bankruptcy, and over the course of 2010-2014 it underwent a long and arduous process of closing down all of its operations. The reasons given for its closure are many, but among the most commonly cited reasons is the competition Blockbuster faced from services like Netflix and Redbox. Some have argued that Netflix and its streaming competitors didn’t have to spell Blockbuster’s demise. Be that as it may, Blockbuster clearly did not adapt well to Netflix’s highly successful streaming model, a model that is now used by numerous other services like Hulu Plus, Amazon Prime, and HBO Now. Netflix is a symbol of the future of video rentals; Blockbuster is a nostalgic icon of a faded past for video rentals.
Despite waning numbers in the area of physical DVD rentals, Netflix still has customers who like the DVD-by-mail model. In an illuminating piece for The Guardian, Alex Hern argues that Netflix’s DVD movies list still has things to offer customers, even if physical DVDs seem to be an outmoded form of video. He writes,
But the thing I like most about being sent the physical media is, I’ll admit, an idiosyncrasy: it’s actually remarkably pleasant to be handed a movie and told “watch this, you don’t get to watch anything else until you’ve seen it.” It means that rather than slobbing out with four episodes of Friends that I’ve seen a hundred times, I’ll make the effort to watch the worthy documentary I put on my watchlist months ago. Sometimes, in a world of instant gratification, it’s nice to be held to a standard.
Other reasons that Hern still sticks to DVD-by-mail make a great deal of sense, and would be appealing to anyone with a good home viewing system. These reasons include:
- Better Video Quality: If you choose the Blu-ray option when you rent from Netflix’s DVD list, you are more likely to get a higher quality viewing experience than standard streaming. Hern points out that even if your internet connection allows you to stream good quality video, you’re still at the mercy of your internet connection, which can become slow, or perhaps drop out entirely. With the Blu-ray you know the standard of quality you will get.
- Better Audio: Hern writes, “Streaming services are typically 5-10 years behind the cutting edge. For instance, Amazon’s home streaming maxes out at Dolby Digital Plus, a 5.1 surround sound system which is fairly outgunned by Blu-ray’s DTS-HD support.” If you are fortunate enough to have a highly advanced audio setup in your home viewing space, you might be able to best Blu-ray’s high audio quality, but those with an ordinary audio setup will be unlikely to match or better Blu-ray audio.
There are good grounds on which to contest Hern’s contention about Blu-ray’s superior video quality. If one subscribes to Netflix’s 4-screen plan, she has the chance to utilize what is called Ultra HD or 4K. The quality of Ultra HD video is so pristine as to be life-like; some viewers have suggested that when one watches video on Ultra HD, it is easy to feel like there isn’t even a screen there, and that what’s happening on TV looks like it’s happening in real-time. With Ultra HD being in its nascent stages in comparison to Blu-ray, it’s hard to say definitively which of the two services is truly better. But one can argue that because of Netflix’s 4-screen plan and the Ultra HD that comes along with it, it’s possible that the superiority of Blu-ray will not always remain the case.
Netflix DVD Library: What Does the Company Plan to Do With It?
On the one hand, it is very easy to prognosticate that Netflix will find ways to scale back its DVD-by-mail service in favor of its streaming service, given that physical rentals are no longer a universal norm for video rentals. On the other, the decline of DVD rentals from Netflix’s physical DVD library is not precipitous in the way some might seem. As mentioned previously, Netflix’s DVD service held strong even as streaming content saw a sharp hike in both profits and number of consumers. On the comparative, Netflix has good reason to prefer streaming, but that does not mean it needs to entirely eliminate its DVD-by-mail service. Rick Aristotle Munarriz, who argues that Netflix streaming “isn’t going away,” explains:
Netflix may have seen demand for discs decline — its subscriber base has fallen to 5.3 million from 6.3 million during the past year alone — but its DVD-by-mail business was still good for a contribution profit of $77.9 million [my emphasis] in its latest quarter. That may be a lot less than the $340 million contribution profit it generated during the same three months from its domestic streaming platform, but it’s still higher than streaming on a per-subscriber basis.
Munarriz points to other things keeping Netflix’s DVD library going on strong: lots of consumers still use physical rental services (see Redbox’s popularity) and Netflix continues to invest in its fulfillment centers, where DVD orders are processed and shipped, for example. Furthermore, because Netflix has to broker deals with entertainment companies to offer movies and TV shows on its streaming site, it cannot offer all the movies it would like to via streaming. One of the benefits of a physical DVD library is that it lets Netflix offer movies it cannot offer through its streaming interface. If a Netflix subscriber searches a movie in streaming and finds out it is unavailable, the Netflix site will let her know that the title is available for physical rental, which provides consumers with a direct incentive to get on Netflix’s DVD-by-mail plan.
Because of the decline in DVD-by-mail memberships and the general cultural preference for streaming rather than physical media (which is playing out in other arenas as well, including music), many pieces on video rentals speculate that the end is nigh for physical DVD/Blu-ray rentals. Just this year, Variety pointed to declining numbers in Redbox rentals (Redbox, keep in mind, ousted Blockbuster in number of locations years before Blockbuster declared bankruptcy) as a sign that the worst is yet to come for those who prefer to have a tangible rental rather than a streaming video. What Netflix’s profits and business model reveal, in response to the worry that DVD rentals will soon become nothing more than cultural curios confined to niche video stores, paints a different picture than the total elimination of DVD-by-mail.
The library of Netflix’s DVD movies list is no doubt a key issue for those making future plans for the library in the coming years, where by all reasonable predictions streaming will be the norm. However, Netflix fortunately appears to have not given into the easy binary of streaming vs. physical media. For Netflix, the rise of streaming doesn’t mean the elimination of DVD-by-mail; instead, in light of the predominance of streaming, the company has to reconfigure the use of the DVD-by-mail service.
With money still being spent by millions of subscribers on DVD-by-mail rentals — in addition to the money Netflix is investing in its fulfillment centers — the company has a clear incentive to not let the physical DVD/Blu-ray library go by the wayside. So long as the future plans for Netflix’s DVD movies list operates on the assumption that there is still good to be done with physical DVD rentals, it’s safe to project that Netflix’s DVD/Blu-ray library will still be around for those consumers that want it.