Netflix Allowing Disc Subs to Keep Final Movie Rentals, Up Rental Queues

The question of what Netflix plans on doing with its huge inventory of DVDs and Blu-ray Discs once it gets out of the disc-rental business on Sept. 29 has been settled.

DVD.com, Netflix’s disc rental subsidiary, has notified its more than 1 million remaining subscribers that they can keep their movie rentals (after Sept. 29), and until then, up their rental queues to 10 or more titles before the service shuts down.

 

“We are not charging for any unreturned discs after 9/29. Please enjoy your final shipments for as long as you like!,” DVD.com wrote on its social media page.

Netflix, on its first-quarter fiscal report in April, announced it would be shuttering its red envelope disc rental business more than 25 years after it created the first by-mail disc rental business. The business strategy, at a time when Blockbuster and Movie Gallery dominated the video store rental business, would not only make Netflix a household name, it would force Blockbuster to establish its own by-mail business. Netflix at one time was the largest individual retail customer for the U.S. Postal Service.

Netflix started its streaming business in 2007, with co-founder Reed Hastings early on aggressively transitioning the company away from packaged media to digital distribution. Netflix ended the most-recent fiscal period with more than 238 million subscribers worldwide (excluding disc rental).

Netflix currently charges disc subscribers $9.99 for one movie-out-at-a-time per month. New disc subscribers have until Aug. 29 to sign up for service. The company last reported $100 million in disc rental revenue in 2022.

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Redbox Generated $31.6 Million in Q3 Revenue

Redbox generated a net loss of $9.5 million on revenue of $31.6 million renting DVDs and Blu-ray Discs, and renting and selling digital movies, in the third quarter (ended Sept. 30). The revenue, which accounted for 34% of parent Chicken Soup for the Soul Entertainment’s total $72.4 million in revenue, represents the partial period of the quarter after CSSE officially completed its $375 million acquisition of Redbox on Aug. 11.

The company operates about 34,000 kiosks nationwide and is looking to add 1,000 kiosks at a select national retailer in 2023. Disc rental revenue topped $24.8 million.

In an age of streaming, rental movies on disc may seem old-school. And while streaming video represented almost 85% of consumer home entertainment revenue in the most recent fiscal period, disc rentals continue to generate incremental revenue.

Consumers spent nearly $136 million renting discs in the quarter, which was down more than 9% from more than $149 million in the prior-year period, according to the DEG: The Digital Entertainment Group.

Indeed, Netflix generated $35 million renting discs through the mail in the U.S. in the quarter. Through nine months of the fiscal year, the streamer’s legacy business unit totaled more than $112 million, or more than $410,000 in daily disc rental revenue across 273 days.