Netflix Vamps Up Its DVD Business, As Streaming Unit Soars

Netflix has 5.3 million DVD subscribers and the division continues to bring in hundreds of millions of dollars in profit each year. The DVD subscriber count has gone down quite substantially, compared to 2010 when Netflix had 20 million subscribers.

Nonetheless, even with the decline of the DVD customer base, the DVD division has a core of customers, primarily in rural areas where people have poor quality Internet service, and those who want to choose programming from a large selection.

Netflix executives say they plan to keep the DVD division, according to a report by New York Times. Hank Breeggemann, Netflix’s DVD division general manager, has been working for the company for 13 years.

Mr. Breeggemann offered the following brief comment about Netflix’s DVD sales.

“If you cut back on service, you are going to lose your subscriber base. Expect us to continue to ship DVDs for the foreseeable future.”

In the past, Netflix had close to 100 employees handling the returns, as well as sorting and shipping out DVDs. However, currently they have a reduced staff of about 25 workers who primarily assist machines while working the nightshift.

The graveyard crew starts work at about 2 a.m., and by 8 a.m. the discs are shipped out to Netflix DVD customers.

Mr. Breeggemann shared his thoughts on how Netflix constantly changes.

“Embrace change — that’s what I’ve learned here at Netflix. If you don’t like change, this is the wrong place. Something is going to change every single day.”

Netflix has been experiencing a constant flux of change since its inception in 1997, when software executives Marc Randolph and Reed Hastings founded the company offering online movie rentals by mail. In 2007, Netflix introduced streaming, with plans to provide its service globally by 2017.

In a September 2011 blog post, Mr. Hastings said Netflix was in the midst of the tumultuous period.

“Eventually these companies realize their error of not focusing enough on the new thing, and then the company fights desperately and hopelessly to recover. Companies rarely die from moving too fast, and they frequently die from moving too slowly.”

Netflix has nearly 93,000 titles on DVD. It also offer next-day delivery service for 92 percent of its subscribers.

Mr. Breeggemann said many people are not aware that Netflix still provides discs.

“What’s interesting is that although the business is in a slow decline, there is still a huge demand there. Yes, we still do DVDs. It is a completely different company.”

Automation technologies allow Netflix to process more DVDs and expand the company’s service areas. Netflix is also in harmony with new delivery standards at the United States Postal Service, resulting in expedited DVD shipments.

[Featured image via Justin Sullivan/Getty Images]