Netflix Giving Up Hope on DVDs

Gareth Cattermole/Getty Images for Netflix

Netflix has dropped plans to increase marketing for its DVD-by-mail operation, with the company's Chief Executive Reed Hastings saying in a conference call yesterday that "we expect DVD subscribers to decline each quarter forever."

This goes against Hastings' more optimistic plan in July, when he announced in a letter to shareholders, "Our goal is to keep DVD as healthy as possible for as many years as possible," promising to resume marketing their DVD business in the fourth quarter of 2011. This plan was clearly squashed by the public's intensely negative response to Qwikster, a separately-branded sister company intended to focus on their DVD rental business. The company lost 2.76 million subscribers in the final months of 2011 partly as a result of this gamble, as well as price hikes.

In addition to Netflix's plan to gradually phase out DVDs, the company has also dropped previously announced plans to add video games to its DVD rental business.

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