By Killing DVD Rentals, Netflix Is Sending An Elitist Message To Middle America

April 19, 2023

Thomas K. Arnold

It’s never wise for an outsider to second guess a business decision. You’re simply not privy to all the factors that led to that decision, so the best you can do is offer a visceral reaction that speaks much more to your own emotions than to any sound business principles.

With that caveat in mind, my immediate reaction to Netflix’s decision to kill the DVD rental business that gave the company its start 25 years ago is that the streamer just issued a loud and clear statement to thousands of consumers who still prefer to rent discs by mail: You don’t matter.

Here on the coast, and especially in Silicon Valley where Netflix’s brain trust comes from, we have a misguided view of American life. We drive Teslas and Mercedes, we send our kids to private schools, and we adore technology.

We stream pretty much everything these days, and we think everyone else does, too.

But the truth is, there are still a lot of people out there who don’t live like we do. And when it comes to entertainment, the humble DVD is still their go-to medium of choice. For some, it’s because they can’t afford half a dozen streaming subscriptions at a monthly cost in excess of $100. For others, it’s because the bandwidth required to stream multiple movies to the same household simply isn’t there. 

Heck, as of August 2021 nearly 30% of rural Americans still had no broadband internet at all, according to a Pew Research Center survey of U.S. adults conducted earlier that year.

Were it not for Redbox, these DVD renters would be left out in the cold, with nothing to watch except broadcast television and what tiny cable bundles they can afford. Redbox DVD rental plans start at just $10 a month, and for that you get a constant stream of new movies, with no quantity limit.

And it’s not just the budget-conscious consumers in so-called “flyover” country. A friend of mine is the chief emergency room physician at a popular California ski resort. He loves those little red envelopes, partly because he’s been renting DVDs by mail since Netflix began offering the service in 2008 but also because he frequently stays in remote cabins with spotty Internet service. 

As our senior news editor, Erik Gruenwedel, reported, the decision to drop DVD rentals was not unexpected. Netflix stopped including disc rental revenue in its financial reports several years ago, and last year saw rental revenue from DVDs and Blu-ray Discs shrink by more than half, to $100 million.

I guess the numbers no longer panned out, given the cost and manpower needed to service a physical by-mail business. As Netflix said, “Making 2023 our final season allows us to maintain our quality of service through the last day and go out on a high note.”

A high note? To what by my calculations amount to more than 800,000 steady DVD rental customers, it’s more like a low blow. 

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