The demand for Netflix‘ red envelope DVDs has dropped dramatically, compared to that of 2011, which is why the company is now closing a call center in Hillsboro, Oregon.
The Netflix call center focused on servicing its DVD subscription business, now they will let go the 188 employees that remained. The Hillsboro facility opened in 2006 and quickly staffed up to around 300.
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Employees say it once had several hundred employees, and still had a few hundred at this time last year. Netflix’s latest regulatory filings show that the lease on its 49,000-square-foot Hillsboro facility runs through April 2016, according to oregonlive.
Netflix has kept DVDs around in part because the DVD subscription business has much higher margins than streaming, and profits from this line of Netflix’s business were essential to finance its first international expansions, according to gigaom. The streaming company used to have close to 14 million DVD subscribers in Q3 of 2011. Three years later, that number has shrunk to less than six million.
As fewer customers pay for DVDs, the flow of money is also starting to slow down. In Q3 of 2014, Netflix generated $186.6 million in revenue from DVDs, compared to $319.7 million in the same quarter three years ago. Contributing profits declined from $146.1 million to $89.4 million. That’s still real money, but a lot less than it used to be. Netflix’s U.S. streaming business overtook DVDs as a contributor of profits in early 2013, and the company saw profits in Q3 of $250.9 million from its U.S. based streaming business.
The streaming company used to have close to 14 million DVD subscribers in Q3 of 2011. Three years later, that number has shrunk to less than six million.
Contributing profits declined from $146.1 million to $89.4 million. That’s still real money, but a lot less than it used to be. Netflix’s U.S. streaming business overtook DVDs as a contributor of profits in early 2013, and the company saw profits in Q3 of $250.9 million from its U.S. based streaming business.