Netflix ends longstanding service as crackdown on password sharing begins
Los Gatos, California - Netflix said it is shutting down its decades-old service that mailed DVDs directly to customers, as the streaming giant prepares to roll out its plan to crack down on subscribers sharing their passwords.
The announcements came as Netflix reported on Tuesday that it added 1.75 million subscribers in the first quarter, bringing the global total to 232.5 million, which is weaker than expected amid mixed financial results.
Netflix said it was discontinuing its DVD-by-mail rental service after 25 years. Shipping by post was the original business model of the company, which was founded in 1997.
But in the streaming age sending physical DVDs to people is a relic of a bygone era. Netflix justified the shuttering of the service by citing the dwindling number of users.
"DVD paved the way for streaming, ensuring that so much of what we
started will continue long into the future," Netflix's letter to shareholders said.
Netflix to roll out "paid sharing" program
In a bid to get more people to pay, Netflix said it was ramping up its campaign to curb password-sharing.
The company said the widespread practice "undermines our ability to invest in and improve Netflix for our paying members, as well as build our business."
Netflix assumes that around 100 million households use the service with other people's login data.
In the first quarter, the company rolled out its "paid sharing" initiative in Canada, New Zealand, Spain, and Portugal. The plan allows a primary account holder to pay a fee to add "extra member" accounts.
The controversial password clampdown began in Latin America last year and will be expanded to more countries this year – including the US.
Another growth driver going forward is expected to be a cheaper subscription plan featuring advertising that was launched only in November, the company said.
Cover photo: REUTERS