Disney brushes aside Amazon DVD tactic


Shares of Disney (DIS +1.1%) aren't showing any ill effect from Amazon's move to halt DVD pre-orders.

Media analysts are quick to note that Amazon's leverage isn't that great with all the streaming and retail options consumers have to pick up favorite titles.

Disney's partnership with Hulu and cozy relationship with Apple make its Amazon distribution worries only a minor headache.

From other sites
Comments (12)
  • User7766461
    , contributor
    Comments (158) | Send Message
     
    Media analysts are quick to note anything that pops into their heads...

     

    I do agree that Disney has significant leverage in these negotiations. That said, the media's claim that Amazon's leverage is "not that great" should be taken with a grain of salt. Sure, everyone who is searching specifically for "Captain America: Winter Soldier" will likely have no problem finding it somewhere (this is Disney's leverage) but what about all the would-be impulse purchasers of the title who may only purchase the movie as they were browsing for something else on Amazon? What about consumers looking for a video in general and not for that specific title, say for a gift, and they plan on making that purchase on Amazon... Do you not think those customers will just pick up an alternative? Who is to say they wouldn't just pick up Spiderman 2 from Amazon for their hypothetical nephews birthday instead? This is the leverage Amazon has and we (or the Media) have no clue what proportion of amazon's new release sales are planned versus impulse purchases, but guess who does know... (A hint, it is the guys who halted new release sales)

     

    This is not a zero sum game, and I can say with confidence that Amazon has a much better understanding of the dynamics of how their customers shop, and what the impact of their strategy will be than the "media".
    11 Aug 2014, 12:57 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (32967) | Send Message
     
    AMZN will just lose a couple million more. AMZN is very experienced in losing money and won't even notice it. Nothing touches AMZN.
    11 Aug 2014, 02:00 PM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (4382) | Send Message
     
    I think you underestimate how many shoppers will chose not to browse on Amazon as soon as they hear that they can no longer get Disney movies through Amazon. Why would you deliberately browse at some store with an inferior selection?
    11 Aug 2014, 03:56 PM Reply Like
  • Anyoption
    , contributor
    Comments (1367) | Send Message
     
    I agree with David. Don't underestimate the fury of moms when they see they can't pre-order on Amazon. This is insanity on Bezos' part.
    11 Aug 2014, 04:12 PM Reply Like
  • citizenleung
    , contributor
    Comments (320) | Send Message
     
    People who want a Disney DVD will buy it with or without Amazon.

     

    Amazon's the loser in this particular tiff.
    11 Aug 2014, 01:36 PM Reply Like
  • User7766461
    , contributor
    Comments (158) | Send Message
     
    I don't think you understand how retail works, and what power a retailer holds in this type of negotiation.

     

    The retailer's power in supplier negotiations is derived from their customer traffic. This is the case whether it is a brick and mortar Wal-Mart or an Amazon.com.

     

    Again, we can categorize potential Disney DVD customers who shop Amazon into 3 buckets.

     

    1). Customers who want a specific Disney DVD, like you mention above. These customers will likely find that DVD without issue whether or not it is available on Amazon. This customer's purchase is at risk for Amazon and not at risk for Disney.

     

    2). Customers shopping Amazon who want a DVD, but not sure which one. It could be for personal use, it could be for a gift, etc... These customers will likely find a DVD without issue whether or not Disney is available on Amazon or not. These customers' purchases are at risk for Disney, not Amazon.

     

    3). Customers shopping Amazon, not with the intent of buying a DVD, who end up making a DVD purchase from Amazon's shelves on impulse. These customers' purchases are at risk for Disney and likely, though probably to a much lesser extent, Amazon as well.

     

    We as outsiders, have no clue how much of Disney's business comes from those 3 customer types. Amazon, however, does have a clue, and they are holding some cards in this game and they know the value of those cards. Whether they are bluffing, or they know they hold a stronger bargaining position, they clearly believe the potential rewards outweigh the risks of such a move. Discounting Amazon's bargaining power in this situation is careless and irresponsible.
    11 Aug 2014, 02:14 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (32967) | Send Message
     
    No matter what happens AMZN is sure to lose more money. AMZN is very reliable.
    11 Aug 2014, 02:15 PM Reply Like
  • User7766461
    , contributor
    Comments (158) | Send Message
     
    "No matter what happens AMZN is sure to lose more money."

     

    What responsible input from a contributor with 5K followers. Following your train of thought... based on the quality of your comments here, which I would rate: Garbage, no matter what happens in the future Paulo Santos is sure to spew more garbage.

     

    What is sad is that anyone would lean on someone for financial insight who spews such nonsense on a whim with utter disregard for the impact of that propaganda on their sheep.

     

    Thanks again for contributing.
    11 Aug 2014, 02:55 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (32967) | Send Message
     
    Well, sure, some will think they're garbage. But the overwhelming majority of others, won't - as can be seen from the "likes" statistic (so this is a fact, not an opinion). So basically, it's your opinion - everybody has one.

     

    As for the losses, they're a fact as well, even though they bother you so much. It's not every company that can boast losing close to half a billion in a single quarter, as Amazon.com is about to do. Even stalwarts like Sears Holding can't achieve such heights.

     

    (ah, and guess what, I think your opinions are garbage too! Whoa!)
    11 Aug 2014, 03:09 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (32967) | Send Message
     
    I think a post here might have been gone, so here's the gist:

     

    - I believe AMZN has negotiating power, much like you. However, these cases are becoming so common that they're likely to have a negative impact on AMZN's image.

     

    - I also believe AMZN is doing this for margin, not to lower prices. Hachette (not Disney) could simply publicly accept AMZN's lower end pricing for ebooks and keep the existing commercial terms. AMZN would have egg on its face, and if AMZN is right on elasticity, Hachette wouldn't lose anything.
    11 Aug 2014, 03:46 PM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (4382) | Send Message
     
    You're forgetting how many shoppers chose Amazon first because "they have the best selection", or even "they have everything". When those statements are no longer true, they will suddenly discover that Walmart and Barnes and Noble also have websites, and pretty darn good ones too. Amazon has spent all this money getting shoppers in the habit of going to Amazon first. They've got a lot to lose when they give customers an incentive to change their behavior at this point.
    11 Aug 2014, 04:01 PM Reply Like
  • Harry Polizzi
    , contributor
    Comments (665) | Send Message
     
    Amazon better be careful. This dispute with DIS coupled with their dispute with Hachette Publishing, in which, in both cases AMZNs weapon is to refuse pre-orders and deny both the corporations involved AND consumers access to video and printed matter just may wake up some somnolent politicians who could start screaming "restraint of trade."

     

    His majesty Jeffie Bezos may think he's invulnerable to other businesses but he ought to speak to Billy Gates about tussling with BIG (also dumb, stupid, & wasteful) government.

     

    Jeffie will need more than silly drones to save his gluterus maximus if that happens!

     

    Harry
    11 Aug 2014, 03:39 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs