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Netflix‘s DVD business is not dead — not yet. Variety reports that although Netflix is spending upwards of $13 billion this year developing an estimated 80 new original feature films and close to 700 television shows, their old school mail-order DVD business is still generating some sweet revenue.
Variety published a piece today that looks at how Netflix predicted the future of streaming television all the way back in 1999. Netflix’s Head of Content Ted Sarandos recalls a meeting with the company’s founder Reed Hastings where the mail-order DVD service maven was outlining a vision for a future based on streaming video. Apparently Hastings knew that at some point the internet would evolve to a point where it would be cheaper to support streaming video than to mail individual DVDs, and that’s what wooed Sarandos to the company.
However, nestled in the report is the information that Netflix’s DVD business is far from dead. Sure, Netflix “has lost approximately 190,000 DVD subscribers every quarter for the past two years,” but Variety also reports that Netflix’s DVD business has generated as much as $53 million in the last fiscal quarter. Plus, Netflix continues to invest in the mobile app DVD.com. Two years ago, DVD.com subscribers added about $15.65 each to Netflix’s profits, and today they contribute an average of $17.66 per member.
Variety says that Netflix expects to close its DVD business by 2022, due to lack of demand. But as of today, the profit margin in that side of the business continues to grow as cost of business decreases. Last quarter there were still 3 million DVD subscribers, but that’s a paltry number compared to Netflix’s 130 million streaming customers.