Amazon is getting out of the DVD rental business with the closure of Lovefilm, the so-called “Netflix of Europe” that Amazon bought in 2011 for a reported $312 million valuation. The company, which operates in the U.K. and Germany, is a subscription service that lets consumers rent DVDs that are sent out by mail – similar to Netflix’s original business model before it became the streaming powerhouse it is today.
According to Amazon, however, DVD rentals by mail are no longer in demand.
“Over the last few years we’ve seen a decreasing demand for Blu-ray and DVD rental as customers increasingly move to streaming,” Amazon explained in an announcement posted to its website, detailing Lovefilm’s closure.
The company says it will shut down the “Lovefilm By Post” service on October 31, 2017, as a result. Customers won’t be billed for the last month, either, Amazon says.
The company also points to Amazon Prime Video as an alternative going forward, and even offers Lovefilm subscribers a £15 discount on a new Fire TV Stick, taking it down to £24.99. (A code that provides the discount is emailed during checkout from the page at amazon.co.uk/firetvstick.)
Amazon is planning to transition Lovefilm’s staff – there are around 50 people there, Variety reports – to new roles at the company, instead of letting them go.
It’s not surprising that Lovefilm By Post is shutting down. Streaming is rapidly eating away at those interested in “renting” movies by mail.
Though Netflix, too, still operates a DVD business, its numbers are dropping. There are some 4 million+ DVD customers left, and they even have their own app for managing their rental queue. But it’s streaming that’s seeing growth – with Netflix beating industry expectations for the last two quarters, adding 5.2 million new customers in the last quarter, typically its weakest. The company now expects 108.3 million subscribers by the end of the current quarter in September.
Amazon’s Lovefilm does not share its numbers, but at its peak it had some 3 million subscribers across both its DVD business and streaming arm, Lovefilm Instant – which was integrated into Amazon Prime Video several years back.
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