Never mind the Nov. 3 election, will the recent disabling of the U.S. Postal Service finally kill the venerable Netflix DVD and Blu-ray rental business?
“Films are taking three or four days to arrive instead of one or two,” writes Wired UK scribe Amit Katwala.
“I've had a DVD account before, and the DVDs came fairly quickly. We just started a new account--I think we're at a week and we still haven't gotten our first DVDs. I'm thinking of just canceling,” said one Reddit user.
“I went back to DVDs because I have two students in the house on remote learning and zoom meetings all day. I will be hitting my data caps if I try to stream movies. Just started subscription again and it took 3-4 days to get first disc,” added another Reddit gripe.
Despite the fact that it’s now dwarfed by the streaming side of the business, the Netflix DVD rental operation still had 2 million users as of the end of the second quarter. And it generated $300 million in revenue in 2019. Netflix's physical media business has been declining at a rate of about 500,000 users a year.
Subscribers say the $7.99-a-month DVD service ($11.99 if you want to have two discs out at once) gives them access to a significantly bigger library than what’s available with streaming. They also say they can notice improvements in visual quality with Blu-ray physical media vs. the compression of video streaming.
The issue of USPS performance is, of course, politically charged right now. But even the man accused by Democratic backers of intentionally “kneecapping” the postal service, Trump-appointed Postmaster General Louis DeJoy, conceded that the on-time delivery rate of mail suddenly fell from 90% to 80% in July.
In regards to Netflix’s delayed discs, there are other variables to consider beyond postal service performance.
With only a small fraction of Netflix’s nearly 73 million U.S. subscribers still paying to receive discs, resources devoted to shipping physical rentals has steadily declined.
Netflix distribution centers, which used to total around 50, have been reduced to just 17 as of last year.
Netflix, of course, famously aborted a plan to spin off its disc rental business into a company called Qwikster nine years ago. Is it getting close to trying to divest disc rentals for good this time?
Beyond sluggish delivery, meanwhile, the slowing of the production pipeline amid the pandemic is also influencing the disc rental business. Users who once relished in watching blockbuster films on Blu-ray are finding fewer and fewer titles to rent.
"If by December they haven't come out with new releases, I may very well cancel my membership,” wrote another Reddit poster.
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