Oh, the red envelope in our mailboxes made us happy. But after 25 years in the DVD subscription business, Netflix DVD mailing is going away. Yes, Netflix has sent out its last red envelope, telling customers they could keep the DVD without any charge. (It even offered 10 free movies for subscribers at the end of the service.)
You may not remember, but Netflix started as a DVD rental-by-mail service back in 1998. At that point in time, DVDs were the way to watch movies and most consumers had to go to their local video rental store to get the discs. (Remember Blockbuster?) In 2007, Netflix shifted to a streaming service, moving away from the physical DVD. But, by 2021 DVD rentals accounted for less than 1% of Netflix revenue.
According to Digital Entertainment Group, sales of physical discs and rentals have fallen by 30% to $361 million in the first quarter of this year compared with last year. On the other side, streaming subscriptions have increased more than 22% to $8.7 billion in the first quarter of this year.
Speaking of moving away from physical DVDs, Best Buy has announced that it will stop selling DVD movies both in stores and online in early 2024. This shouldn’t surprise most college students; they most likely only stream movies online. But, we have to consider how the way we watch movies and TV shows has changed over the decades. It’s a great example of a product life cycle and how services have evolved.
Want to watch a movie?
Group Activities and Discussion Questions:
- Poll students: Who has used the DVD mail service from Netflix? Who watches DVD?
- Show a video: https://youtu.be/8v8DMfnj6nQ?si=bsEOXllfCP_iYVGv
- Discuss the stages in the product life cycle.
- What are the marketing objectives in each stage?
- Divide students into teams. Have each team draw a product life cycle and place various products and services into each stage.
- Make sure to have them include movie watching such as VHS, DVD, and streaming on the PLC.
- Next, have students brainstorm on how to revise or reposition products in the last stages of the PLC to move them into an earlier stage of the life cycle.
Source: Kelly, S. (29 September 2023). Netflix shutters its DVD rental business, marketing the end of the red envelope era. CNN Business; Norfleet, N. (14 October 2023). Best Buy to end DVD, Blu-ray sales next year. Minneapolis Star Tribune; Ugwu, R. (24 August, 2023). Netflix says you can keep their DVDs (and request more, too). New York Times.
