In a nondescript office park near Disneyland, there is an unassuming warehouse that holds great significance. This warehouse is a Netflix DVD distribution plant, once a thriving hub that processed 1.2 million DVDs per week, employed 50 people, and generated millions in revenue. However, now it is down to just six employees who handle the remaining metallic discs. This Friday, Netflix will officially bring an end to this era and discontinue the iconic red envelope mailing service.
Hank Breeggemann, the general manager of Netflix’s DVD division, expressed his sadness about this closure in an interview, stating, “It’s sad when you get to the end because it’s been a big part of all of our lives for so long. But everything runs its cycle. We had a great 25-year run and changed the entertainment industry, the way people viewed movies at home.”
When Netflix first started mailing DVDs in 1998, with “Beetlejuice” as the inaugural shipment, nobody in Hollywood anticipated the company would eventually revolutionize the entire entertainment industry. It began as an idea between Reed Hastings and Marc Randolph, successful businessmen who sought to reimagine the DVD rental business. They eliminated due dates, late fees, and monthly rental limits.
Netflix accomplished far more than its initial goals. The DVD business obliterated competitors like Blockbuster and transformed public viewing habits. With the launch of its streaming service and its venture into producing original content, Netflix completely reshaped the entertainment industry. In fact, the economics of streaming, which many actors and writers argue are detrimental to them, lie at the core of the current strike that has paralyzed Hollywood.
Streaming had already rendered DVDs obsolete from a business standpoint, even before the strikes. At its peak, Netflix ranked as the Postal Service’s fifth-largest customer, operating numerous shipping and shuttle facilities to provide one-day delivery to 98.5% of its customer base. Today, there are only five such facilities remaining. DVD revenue for the first half of 2023 amounted to $60 million, while streaming revenue in the United States during the same period reached a staggering $6.5 billion.
Despite the reduced staff, the Anaheim facility still manages to receive and send around 50,000 discs weekly, spanning from popular titles like “Avatar: The Way of Water” and “The Fabelmans” to more obscure films such as the 1998 crime thriller “Place Vendôme” starring Catherine Deneuve. Each employee at this facility has served the company for over a decade, with some dedicating as long as 18 years. Although 100 people still work on Netflix’s DVD side, most will soon be leaving the company.
Some employees, like Edgar Ramos, joined Netflix straight out of high school and have now mastered the operation of Netflix’s auto-sorting machines and Automated Rental Return Machine (ARRM). These individuals handle the company’s DVD operations with precision comparable to Swiss watch engineers. Mr. Ramos expressed his sadness, saying, “I am sad… Wish we could do streaming over here, but it is what it is.”
Mike Calabro, Netflix’s senior operations manager with over 13 years of tenure, acknowledged that the unexpected moments of fun were influential in his decision to stay. These included drawings on envelopes by renters and the evidence of well-integrated DVDs, like Cheetos dust and coffee stains, which documented the product’s presence in customers’ lives. However, when asked if he had ever met some of the most active customers personally, Mr. Calabro quickly replied with a firm “No!” The facility’s anonymous appearance deliberately contrasts with the prominent Netflix logos found elsewhere, as it aims to discourage visitors.
According to Mr. Calabro, allowing customers to return DVDs in person would lead to confusion: “If we put Netflix out on the door, we would have people showing up with their discs, saying: ‘Hey, I’d like to return this. Can you give me my next disc?’ We wanted to mail both ways.” Netflix’s DVD operations still cater to around one million customers, many of whom remain loyal.
One such devoted customer is Bean Porter, a resident of St. Charles, Ill., who has subscribed to Netflix’s DVD and streaming services since 2015. She expressed feeling devastated by the discontinuation of DVDs. With her subscription, she could watch shows like “Yellowstone” and “The Handmaid’s Tale” by renting the DVDs instead of subscribing to additional streaming services. Ms. Porter and her husband also watch three to four movies weekly and find Netflix’s DVD library richer and more diverse than other subscription platforms. DVDs prove more convenient for outdoor movie viewings due to internet connectivity issues. Additionally, Ms. Porter has engaged with Netflix’s DVD operations on social media, posting videos, interacting with other customers, and communicating directly with the social media managers.
She said, “I’m pretty angry. I’m just going to have to do streaming, and I feel like what they’re doing is forcing me into having fewer options.” In response to the backlash, Netflix allows its DVD customers to retain their final rentals. Ms. Porter plans to keep titles like “The Breakfast Club,” “Goonies,” and “The Sound of Music” from her remaining discs. As for the last DVD she will watch, she will leave it up to fate. “I have 45 movies left in my queue, and where I land is where I’ll land, as there are too many good options to pick from,” she remarked.
The employees at the Anaheim facility maintain a more positive outlook. Lorraine Segura, who joined Netflix in 2008, used to open 650 envelopes per hour. When automation was introduced, she was among the few employees chosen to receive training at the Fremont facility to operate the machines, subsequently imparting the knowledge to others. She now serves as a senior operations manager alongside Mr. Calabro.
“I’ve learned a lot here: how to fix machines, how to make goals and hit targets,” she explained, before leading her team in ergonomic exercises to prevent repetitive stress injuries. “I feel empowered now to get out in the world and do something new.”