Netflix is ending its postal DVD service after 25 years in a bid to boost subscribers and better its service amid an increasingly competitive streaming space.
In a letter to shareholders, the company described the DVD service as “the booster rocket that got streaming to a leading position,” but added that the business was shrinking and would wind down in September.
The news came as the streaming giant posted its quarterly results, recording revenue growth of 4 per cent year-on-year to $8.16bn (£6.54bn), broadly in line with Wall Street expectations. The company estimated revenues would reach $8.24bn (£6.61bn) in the next quarter, below analyst forecasts.
Net income also fell from $1.6bn (£1.2bn) to $1.3bn (£1.04bn).
The streaming service, which is faced with competition from rivals including Disney+, Hulu and Amazon, also announced that it would push back plans to roll out paid password sharing broadly to the next quarter.
The move was announced last year to clamp down on account sharing and boost subscribers.
“While this means that some of the expected membership growth and revenue benefit will fall in Q3 rather than Q2, we believe this will result in a better outcome for both our members and our business,” the company added in the letter.
Netflix has already rolled out paid sharing in four countries, including Canada.
“Canada’s paid member base is now larger than it was prior to launch and revenue is growing faster than in the US,” analysts at Jefferies said in a note.
Netflix added 1.75 million subscribers in the most recent quarter — down from the 7.66 million added in the last quarter and short of analyst forecasts of 2 million — and reported a rise in membership to 232.5 million.
“We see Netflix as the main beneficiary of easing competition in DTC as peers focus on profits. We believe this will drive upside to subs/pricing power in the coming yrs while also keeping a lid on content costs, one of the biggest swing factors for profits,” analysts at UBS added in a note.