Netflix Closes DVD Distribution Center As DVD Profits DeclineBy: Chris Crum - August 13, 2013
Netflix is reportedly closing a DVD distribution center in Bloomfield, Connecticut on Wednesday as demand for its DVD rentals falls and the post office alters its services. The Courant shares a statement from a Netflix spokesperson:
“Netflix has closed the Bloomfield DVD distribution center due mainly to United States Postal Service transportation and service changes, along with increased internal production efficiencies, resulting [in] a small number of jobs lost.”
The reporter notes that the spokesperson would not specify how exactly the post office is hurting business, but one has to only look to the company’s recent earnings report and letter to shareholders, along with common sense to see why Netflix would cut a distribution center. DVD demand is simply falling, and in no small part thanks to Netflix’s own streaming service.
DVD contribution profit fell 19% year over year. Interestingly, however, the company said in the letter, “We don’t foresee USPS service changes that will have a material negative impact upon us or our members over the next few quarters.
Don’t expect the DVD service to go away anytime soon. The company also noted in the letter that, “The huge selection we offer on DVD continues to be a draw for over 7 million households.”
That selection is indeed important because it is far greater than what Netflix has to offer through streaming. Still, the company is clearly making a huge push to broaden that as well, both through original and exclusive programs and partnerships. Chief Content Officer Ted Sarandos also recently indicated that Netflix could double its content output next year.
If Netflix got rid of DVDs it would be sacrificing a great deal of content without more big deals in place. Members would have no way to watch all those popular HBO shows, for example, without turning to competitors.
It’s unclear whether Netflix currently has plans to get rid of more distribution centers. We’ve reached out to the company for comment, and will update accordingly.