Netflix is shutting down its DVD service this week.
Since launching in 1998, it has sent >5 billion DVDs and — at its busiest — was shipping 1.2 million discs a week.
How? One major innovation was the automated rental return machine (AARM).
A single person could open ~600 DVDs per hour (checking titles, finding damage, cleaning discs). The AARM processes 3,500 DVDs per hour.
“At its height, Netflix was the Postal Service’s 5th-largest customer,” writes the New York Times. “[It] operated 58 shipping facilities and 128 shuttle locations that allowed Netflix to serve 98.5 percent of its customer base with one-day delivery.”
The AARM — Netflix owned >100 of them — had “the precision of a Swiss watch manufacturer”. And it helped the DVD business grow to 20 million subs and ~$1B in sales by early 2010s.
It’s been steady decline since: Netflix DVD has 1m subs still but sales down to $146m in 2022 (~0.5% of total $32B sales).
The first DVD shipped was “Beetlejuice”…what will be the last?

Here is the NYT article: nytimes.com
Check out his interesting piece from Bronway, which won the contract to make the AARM (explaining their approach with videos): bronway.com
Finally, wow, this chart:

On a related note, here’s an analysis of Netflix’s management deck that lays out why it long paid top-of-market base salaries for engineers and designers. readtrung.com

This meme is now official

One more insane stat: Redbox did $550m last year…and someone paid it forward really hard one time, which is wild.

Ah turns out that Redbox tried 3-4x to buy Netflix’s DVD business but was rebuffed: hollywoodreporter.com

Netflix’s landing page in 2008: when the streaming service got equal billing with the DVD delivery business.

First Netflix DVD shipped was “Casino” (before official launch)