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Responding to DVD subscription decline, Netflix closes call center

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Netflix is closing a call center devoted to its DVD subscription business in Hillsboro, Oregon, letting go of 188 remaining employees, according to a report by the Oregonian. The news is just the latest sign for Netflix shifting priorities away from its DVD business as the number of subscribers still paying for those iconic red envelopes continues to decline.

[company]Netflix[/company] used to have close to 14 million DVD subscribers in Q3 of 2011. Three years later, that number has shrunk to less than six million. The company has responded by closing a number of its DVD distribution centers, and is now looking to manage customer support out of its DVD business offices in Fremont, California.

Netflix executives have long said that streaming is the future of Netflix, and never introduced DVD rentals in any market outside of the U.S. The company has kept DVDs around in part because the DVD subscription business has much higher margins than streaming, and profits from this line of Netflix’s business were essential to finance its first international expansions.

However, as fewer customers pay for DVDs, the flow of money is also starting to slow down. In Q3 of 2014, Netflix generated $186.6 million in revenue from DVDs, compared to $319.7 million in the same quarter three years ago. Contributing profits declined from $146.1 million to $89.4 million. That’s still real money, but a lot less than it used to be. Netflix’s U.S. streaming business overtook DVDs as a contributor of profits in early 2013, and the company saw profits in Q3 of $250.9 million from its U.S. based streaming business.

Photo courtesy of (CC-BY-SA) Flickr user Alan Levine.

6 Responses to “Responding to DVD subscription decline, Netflix closes call center”

  1. I subscribe to DVD in southeast coastal city and have had no issues with deliverable for a few years now. I will miss DVDs a lot if they get rid of this service. DVDs give me max control. Don’t carte for streaming much of anything on my TV. Doing so on a computer is another matter.

  2. Stephen N Russell

    Ive had good DVD delieveries here in So CA & have streaming but will cancel DVD for Nov billing cycle.

    Streaming issues
    Cant “freeze” movies to watch later like on DVD
    Cant type in movie title & appear on screen
    Once U stream U see it through.
    Wont shift DVD titles to streaming or denote those in streaming & add to Your Favs or Your choices.

    Otherwise its great.

    Much time spent trying to find movie X to see then stream.

  3. nerdrage

    I still get DVDs but only because there’s a lot more stuff available on DVD only than on streaming. If Netflix really wants us to stop getting DVDs, license more titles for streaming. Ball’s in their court.

    Alternatively, I’ll wait for HBO’s streaming-only platform and then jump between HBO and Netflix subscriptions to take up the slack of the massive backlog of HBO shows that Netflix has never gotten on streaming and never will. No sense having both subscriptions at once, but sequentially makes sense.

  4. gonzo90017

    I cancelled my DVD subscription about a year ago. Although I dont subscribe to their streaming offering.

    The reason I cancelled is because they rarely restock their catalog. Imagine that they dont have such iconic movies like Indiana Jones or Back to the Future on Bluray. Also a bunch of popular 80’s and 90’s cartoons that have been missing dvds (series not complete) for years have never been replaced.

    This along with slow shipping times made me cancel.

  5. Will Buckley

    Thanks For reminding me, how much I miss those red envelopes and what’s missing with streaming. As a once huge fan of Netflix starting in the late 90’s. I was astounding how well they handled the rental by mail model. Fast, accurate, customer friendly,

    But as a marketing pro who saw the future of streaming,, I wondered how Netflix would handle the migration. They obviously did a great job, but in the process dramatically reduced the number of titles and to my think inking dumbed down the choices.

  6. I suggest that one reason people are dropping DVD subscription is the bait and switch Netflix performs by listing titles and NEVER, EVER shipping them. This has happened 2X for me. And I have cancelled my DVD subscription twice because of it. This is not necessarily a “natural phenomenon” as Netflix tries to present it, but a customer service issue on their part. People hate finding a title, putting it in the queue then watch as it keeps getting bumped to the end of the queue and never ever being shipped. Shame on you Netflix.