Netflix drops its used DVD store

November 5, 2008 | In Movies & TV, Technology |

A few days ago a friend called letting me know Netflix was doing away with its used DVD store. As a Netflix member and collector of DVDs, I have used the used section of the Web site a number of times to pick up movies mostly for $5.99.

Netflix started selling used DVDs a few years ago, a side venture to its more traditional rental movies by mail model that made Netflix one of the most successful online businesses around.

The move for Netflix to drop out of the used DVD business isn’t really that surprising to me and I don’t think the reasons for the decision are really being talked about.

Netflix claims the decision was made to allow the company the room to focus on its core business — movie rentals by mail and streaming video. I’m guessing that is true, but there is something in the statement that is missing.

Netflix is working hard on building its streaming service, announcing an upgrade to HD for a number of titles, prepping for a launch on Xbox 360 and TiVo along with Blu-Ray players that support the format.

The company has also made agreements with the movie channel Starz in order to get its hands on new movie releases. I think this agreement is actually the most telling reason for Netflix to pull out of the used store business.

Lets face it, the movie industry hates used stores. A used DVD sold doesn’t count in sales figures for the movie and ultimately means a “loss in sales” for the studio or distributor that doesn’t get a cut of that sale.

The movie industry has been slow to adopt the Netflix streaming service, mostly pushing out “catalog movies” that haven’t spent time on the big screen in a few years.

Closing down its used DVD store is a good will measure for Netflix, letting the movie companies know they are ready to play ball and really push the streaming service even further. Netflix is positioning themselves for the future and they’re doing it now.

I only hope Netflix doesn’t give too much. The entertainment industry is notorious for taking a pound when an ounce was offered.

At any rate, the streaming service is building up and becoming one of the most compelling offerings out there. If that means missing out on a few deals on DVD, that’s fine. After all, I’ll be able to watch it on my Xbox soon enough.