Netflix Ending DVD Program as Password-Sharing Changes Roll Out in U.S.

Netflix is ushering in a wave of change this week. Days after its failed attempt at a second live event on April 16, the streaming platform has announced the end of the Netflix DVD program, as well as the rollout of the password-sharing plan.

Netflix’s DVD program is as old as the company itself. Twenty-five years later, its DVD-by-mail business will officially come to a close on September 29, 2023.

“After an incredible 25 year run, we’ve decided to wind down DVD.com later this year. Our goal has always been to provide the best service for our members but as the business continues to shrink that’s going to become increasingly difficult. So we want to go out on a high, and will be shipping our final discs on September 29, 2023,” Netflix co-CEO Ted Sarandos said in a statement on the platform’s blog on April 18. “Those iconic red envelopes changed the way people watched shows and movies at home — and they paved the way for the shift to streaming.”

The statement continues: “From the beginning, our members loved the choice and control that direct-to-consumer entertainment offered: the wide variety of the titles and the ability to binge watch entire series. DVDs also led to our first foray into original programming — with Red Envelope Entertainment titles including Sherrybaby and Zach Galifianakis Live at the Purple Onion.

“We feel so privileged to have been able to share movie nights with our DVD members for so long, so proud of what our employees achieved and excited to continue pleasing entertainment fans for many more decades to come.”

After an incredible 25 year run, we’ve decided to wind down https://t.co/6h2lrcGg2b later this year.

To everyone who ever added a DVD to their queue or waited by the mailbox for a red envelope to arrive: Thank you! https://t.co/McxJUlLlGF pic.twitter.com/nBXzgvvv7p

— Netflix (@netflix) April 18, 2023

The same day, Netflix told shareholders to expect a “broad rollout” of its paid-sharing plan in the second quarter of 2023, meant to help crack down on password sharing.

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What You Need to Know About Netflix's Account-Sharing Crackdown

The password-sharing crackdown was announced during a Q1 2023 earnings report. The password-sharing changes were implemented in Canada, New Zealand, Portugal, and Spain in February 2023. The plan featured a “buy an extra member” option, which allows users to add one to two people outside of their household to their plan for an additional monthly price. This was first implemented in Chile, Costa Rica, and Peru. The April 18 shareholders letter confirmed these crackdowns would expand in the U.S. in the second quarter.

“In Q1, we launched paid sharing in four countries and are pleased with the results,” Netflix said in a letter to shareholders, per Variety. “We are planning on a broad rollout, including in the U.S., in Q2.”

Netflix admitted in a Q4 2022 letter that “this will not be a universally popular move.” Indeed, the Q1 report revealed that the new plan led to increased account cancellations. But they did see an increase in revenue elsewhere as a result of the new plan.

“As with Latin America, we see a cancel reaction in each market when we announce [paid sharing plans], which impacts near-term member growth,” said the Q1 2023 letter. “But as borrowers start to activate their own accounts and existing members add ‘extra member’ accounts, we see increased acquisition and revenue.”

The company said that its Canadian membership base has increased since implementing the shared password plan. It also believes that Canada is a “reliable predictor” of how the plan changes will go in the U.S.

“With each launch, we learn more about how best to roll out these changes and what matters to members the most, in particular maintaining travel/watching on the go and the ability for people to better control access to their accounts as well as transfer profiles to separate accounts,” the letter noted said. By staggering the paid-sharing plan rollout, Netflix said it “found enough improvement opportunities in these areas to shift a broad launch to Q2 to implement those changes. As noted above, while this will shift some of the membership growth and revenue benefit from Q2 to Q3, we believe it will result in a better outcome for our members and our business. Longer term, paid sharing will ensure a bigger revenue base from which we can grow as we improve our service.”

Some U.S. Netflix users have already been locked out of their Netflix profiles and prompted to make a new one. Their viewing history and watch lists can be transferred to a new account when starting a new subscription. As stated above, account holders can pay to add up to two out-of-household users to their accounts for an additional monthly fee.