Although Netflix is evolving into a video streaming service, its DVD-by-mail subscribers remain an important — and profitable — part of its business, The New York Times reported this week.
Netflix’s DVD subscriber base has dropped from a peak of about 20 million in 2010 to 5.3 million today. The division continues to generate hundreds of millions of dollars in yearly profits, however, thanks to technologies that lower costs and improve service.
For example, some 3,400 discs hourly zip through Netflix’s rental return machines — five times as many as when employees processed discs by hand.
The company also has dropped its national network of distribution centers to 33, down from about 50.
“Embrace change — that’s what I’ve learned here,” Hank Breeggemann, the DVD division’s general manager told the Times.
Netflix boasts 65 million streaming subscribers in 50 countries, attracted by original productions such as “House of Cards” and “Bloodline.”
But funding such aggressive expansion means the company expects just break-even results for streaming through 2016. That’s why executives feel it’s important to retain the DVD unit’s customers and profits.
“Expect us to continue to ship DVDs for the foreseeable future,” Breeggemann said.