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Netflix Heralds 4 Billion Disc Rentals

3 Mar, 2013 By: Erik Gruenwedel

Streaming service limits milestone acknowledgment to disc mailers

Netflix is quietly touting it has shipped more than 4 billion disc rentals since launching service in 1999. With scant pomp or ceremony, the Los Gatos, Calif.-based by-mail rental pioneer is noting the milestone on disc mailers sent to subscribers.

“We ship emotions … 4 Billion DVDs and counting. Thanks for helping us reach this milestone. Your love of TV shows and movies made it possible,” Netflix wrote on the mailer.

Netflix shipped its 4 billionth disc Jan. 8th to subscriber Joe Green of Geneseo, Ill., from its Des Moines, Iowa shipping hub. Green received a lifetime disc membership to Netflix, four one-year DVD membership gift certificates to share with family and friends; a Sony Blu-ray Disc player and five Sony BD movies from Sony Pictures Home Entertainment, among related Netflix swag.

Honoring the occasion was Netflix's director of hub management, Lee Hall; Des Moines hub manager John Walters and the company's senior manager of postal operations, Joleen Baxa. The local Postmaster and regional managers for the USPS joined Netflix in celebrating the milestone. To read a local newspaper account of the event, click here.

The 4 billion threshold is noteworthy (aside from representing more than half the globe's human population) since Netflix has turned a cold shoulder in recent years to disc rentals, opting instead to focus attention and marketing efforts establishing a subscription video-on-demand business.

Indeed, when Netflix shipped its billionth disc in 2007, it issued a press release. The two-billionth disc in 2009 generated at least a blog post. But when asked in 2011 by analysts about a potential three-billionth disc rental, CEO Reed Hastings infamously dismissed the query, saying Netflix was focused on streaming and building the nascent SVOD market.

Any attention on rental discs appeared to be off point and not worthy of mention.

That arrogance reached its nadir later that summer when Netflix attempted to spin-off the disc business coupled with a price increase to its popular hybrid streaming/disc program. The result was an exodus of more than 800,000 subs, a $11 billion ding on its market cap, and media flogging of the brand and Hastings.

That episode led Hastings to issue a public apology and management softening its stance toward physical rentals. A common sense move considering discs have represented the bulk of Netflix’s operating income since Day 1 -- including more than 50% of operating income during the service's most-recent fiscal period.

The mailers would appear to mark another step in what Hastings recently characterized is Netflix’s ongoing three-year probation period to bring back subscriber and investor confidence.

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