Netflix Is Abandoning DVDs

When Netflix started up more than 10 years ago, its sales pitch was pretty simple: Hey, subscribe to us, and we'll mail you DVDs that you can then mail back to us without worrying about any late fees. But as the rental market moves toward online and on-demand models, Netflix's iconic red envelopes may eventually become as antiquated as VHS tapes. Beefing up their streaming business, Netflix has predicted that in about two years their economics will be geared more toward their "Watch Instantly" service than through physical discs. For that to happen, Netflix will have to nudge their DVD-loyal customers to the new platform. And on Monday, the company learned just how hard that may be.

In a seemingly innocent 109-word blog post, Netflix director of product management Jamie Odell announced, "We're removing the 'Add to DVD Queue' option from streaming devices," suggesting that it was being done so that the company "can concentrate on offering you the titles that are available to watch instantly." Granted, the Netflix website still allows DVD queue updating, but this post, dropped on the morning of Martin Luther King, Jr. Day, created an immediate firestorm of comments -- most of them very, very angry.

"Clearly Netflix wants to send less discs through the mail, and therefore wants to make it more difficult for the user to add to their queue in furtherance of that," wrote "Eldendor." "Horrible idea!" wrote "usrbingeek." "Especially when there are still few titles available for streaming and the titles that you do have, seem to have very narrow license windows." On and on came the complaints, with most responders saying essentially (1) I like having access to DVDs even if I use a PS3 or mobile phone to stream movies on Netflix; and (2) there aren't enough good titles available on "Watch Instantly." "I think this is a totally foolish move on your part. I like to be able to add movies to my DVD queue from my iPhone," commented "b.dsign." "[I]f this means that netflix is going to add more movies to watch instantly i support the change," "Beto" wrote, "but if they are not, then it's just a bad idea."

As of yet Netflix hasn't released any response, which, really, is their response. Whether customers like or not, Netflix knows that the future is moving away from physical discs and toward instant access. And, really, none of us who use Netflix should be surprised: Back in November the company announced that they were offering a new lower subscription rate for streaming-only customers while increasing the rate for people who still wanted DVDs. Right now, if you want DVDs from Netflix, the company is less than thrilled with you: They need you to get used to the idea of streaming films and TV shows so that you'll drop the physical disc habit: a craving, ironically, that they themselves created thanks to the ease of their iconic red envelopes.

But while Netflix is slowly discouraging the continued interest in DVDs, they face a different challenge even if their business model transformation succeeds. As Slate reported, if Netflix's streaming business takes off the way they think it will, it could prove a serious drain on America's broadband capacity, which is far less nimble than other countries'. Netflix is angering customers right now because the company wants to do away with DVDs: We don't even want to think of a future where Netflix angers the entire Internet community because too many people are streaming old episodes of "Friends" at the same time.