After 25 years, Netflix is closing down its DVD-by-mail service for good.
In 1998, Reed Hastings and Marc Randolph launched Netflix as an online DVD rental service. They believed this to be the right business model for where Internet bandwidth was at that time. According to Netflix, the first DVD it shipped on March 10th, 1998 was Beetlejuice. Since then, the company has shipped over 5.2 billion DVDs.
Yet, from the start, the founders had a vision of transforming Netflix into a video streaming platform. In the early days, Netflix invested up to 2% of its revenues to develop its streaming service and waited for the moment when increasing internet bandwidth made its service sustainable.
In 2007, Netflix successfully shifted from low tech to high tech, slowly replacing physical DVDs with online streaming. Without the scalability constraints of shipping physical DVDs, the streaming business grew rapidly. By 2018, 96% of Netflix’s revenues came from streaming.
In 2013, Netflix further shifted its model and began creating original content.