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Amazon Takes on Disney in Dispute Over Home Video Distribution

by Michael Goodman | 8月 12, 2014

Most retailers prefer not to get in to public spats with their suppliers but this clearly this is not the case with Amazon who in a dispute with Disney has blocked pre-orders of certain upcoming releases, including “Muppets Most Wanted," "Maleficent," and "Guardians of the Galaxy." Disc options for "Captain America: The Winter Soldier" and “Million Dollar Arm” are not listed at all, while Amazon Instant Video pre-order options remain. In comparison, these titles are available for pre-order at other online retail outlets such as Walmart.com and Target.com.

Disrupting existing business models is nothing new at Amazon. In fact, it is a core principle upon which their business is built. Since launching in 1995, Amazon has grown to become the 5th largest retailer in the U.S. and 10th globally with $74.45 billion in retail sales worldwide in 2013. In all likelihood Amazon will join an exclusive club of four retailers with $100+ billion in retail sales, in the not too distant future.

When comparing online sales Amazon dominates even more completely. In the U.S. in 2013, Amazon had $67.9 billion in e-commerce sales, totaling more than the next nine largest retailers online sales combined, according to data from Internet Retailer. Apple had the 2nd most e-commerce sales with $18.3 billion, followed by Staples ($10.4 billion), Walmart ($10.0 billion), and Sears ($4.9 billion).

Now Amazon is setting its sight on challenging the business models that have exist between content owners (e.g., book publishers, movie studios) and retailers for decades.

Amazon’s dispute with Disney is not its first with a content provider.

Amazon is locked in a several month long dispute with publishing house Hachette over eBook prices which has resulted in shipping delays for some Hachette titles and pre-order buttons being stripped away for others. This dispute is on-going.

In a dispute over pricing in mid-May, Amazon refused pre-orders on upcoming Warner Bros. home videos including "The Lego Movie," "300: Rise of an Empire," "Winter's Tale" and "Transcendence." Amazon and Warner Bros. came to a mutually agreeable solution after a few weeks.

In the best of times the retail business is challenging, retailers do not want to discourage sales or drive consumer to competitors. Clearly, Amazon feels secure enough in its position in the market to take this risk; however, this is an opportunity for competitors offering pre-orders of these movies; particularly those with large home video business such as Walmart, Target, and Best Buy to highlight that they are doing so and gain back a little ground lost to Amazon.

Recapturing market share from Amazon is particularly relevant in the U.S. home video category where physical sell-thru has lost nearly 50% of its value over the past decade and electronic sell-thru is proving insufficient to offset this decline. Strategy Analytics estimates that electronic sell-thru accounted for $1.1 billion in revenue in 2013.

Amazon rarely gives competitors such a clear shot to distinguish themselves, when they do it is imperative that they take advantage because it is not going to last for long.

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