Once upon a time, an upstart company called Netflix (NFLX 1.82%) redefined how people consumed movies and TV shows. It all started with those iconic red envelopes, which brought DVDs right to people's doorsteps and opened up a whole new world of entertainment in their living rooms.

And now it's time to bid a nostalgic farewell to those crimson carriers of cinematic joy. As announced in the company's first-quarter 2023 letter to shareholders, Netflix will officially pull the plug on DVD.com on Sept. 29, 2023, marking the end of a 25-year era.

Let's take a stroll down memory lane and remember the glory days of Netflix's DVD service, a time when "queue" entered our vocabulary and binge-watching took root. From the humble beginnings of mailing DVDs to its Qwikster misstep, and then onward to the pending closeout of the DVD service, Netflix's journey has never been boring.

Next stop: World domination (well, almost)

Sure, it's tempting to wax poetic about the wistful demise of Netflix's DVD days, but let's not forget that the company's shift from red envelopes to streaming signals a brighter future. The end of the DVD chapter allows Netflix to focus on what really matters -- boosting its streaming services around the globe and exploring new avenues like video games and consumer products.

I've been pounding the table about this idea for years already, so it's not really a secret, but Netflix keeps snagging pages from the Walt Disney playbook. Removing the DVD distraction in favor of a more intense focus on next-generation growth plans is simply one more step in that direction.

With free cash flows soaring to $2.9 billion in the last four quarters, including a company-record $2.1 billion in the first quarter alone, the streaming giant is well on its way to building an entertainment empire in its own right. That used to be an impossible dream due to a lack of cash reserves, but that's changing. The new-and-reformed Netflix, which prefers profitable top-line growth over the heedless subscriber increases of years past, should start exploring a whole new class of cash-intensive business ideas. I'm not saying we'll see Netflix hotels and theme parks popping up over the next decade, but it honestly wouldn't be much of a surprise anymore.

As Netflix evolves and diversifies its offerings, it could evolve into a new conglomerate, one that rivals the likes of Disney itself. And I'd much rather see constructive business investments than cash-burning dividends or stock buybacks. Maybe in a decade or three, but it's much too early to start sending growth-promoting cash back to investors.

There is so much left to do.

Out with the old, in with the new

From its inception as a pure-play DVD rental service to its current position as a leader in the streaming industry, Netflix has consistently pushed the red envelope and redefined customers' expectations of entertainment.

The decision to shutter DVD.com (which was supposed to become Qwikster for three inglorious weeks in 2011) might mark the end of a culture-defining story, but it also signifies a new beginning for Netflix. Those envelopes used to be all-important, when the company sported 25 million DVD subscribers and forced the U.S. Postal Service to change its mail delivery processes in order to handle the flood of red disc wrappers. Nowadays, the DVD business hardly seems worth the effort of managing shipments and content libraries in distribution centers around this great, big country. Last year, DVD services accounted for $146 million in revenue -- merely a rounding error in Netflix's total full-year sales of $31.6 billion.

Infographic showing how Netflix converted revenue inflows into expenses and profits in Q1 2023. DVD revenues are barely visible.

We had to exaggerate the DVD segment's revenue stream here, because the line can't be less than a pixel wide. In percentages of total sales, it's a 99.6%-to-0.4% split between streaming and DVD.

So, as we say our goodbyes to the little red envelopes that changed the world, let's raise a toast to the future of entertainment. We may no longer be waiting by the mailbox for our next DVD, but we can rest assured that Netflix will continue to captivate, innovate, and redefine the way we consume content for decades to come. The end of the DVD era is still just the early days of Netflix's empire-building saga.

A new era of entertainment unfolds

It's time to embrace the future that Netflix is building.

As the streaming giant sets its sights on new horizons, I'm eagerly awaiting the next chapter in its incredible journey. If I'm right about the wide-ranging conglomerate ambition, Netflix in its final form might outlive us all, as Disney did with our great grandparents.