October 31, 2014
Amazon blocks pre-order of Disney DVDs amid Hachette spat
Bloomberg News (*)
SAN FRANCISCO — Amazon.com blocked the pre-order option of Walt Disney hit movie Captain America: The Winter Soldier and other titles in disk form, repeating a tactic used in disputes with publisher Hachette and Warner Bros.
Maleficent, another Disney summer blockbuster, also isn’t available for DVD pre-order on Amazon’s website. The world’s largest online retailer still offers both movies in pre-order on its online streaming service.
Amazon’s clashes with media companies have intensified in the past months as the Seattle-based company seeks to use its heft in markets from books to home video to demand better terms from its vendors. While the dispute with Time Warner’s Warner Bros. is getting resolved, the spat with French publisher Hachette Book Group is escalating.
“They are squeezing studios on DVD pricing, understandable given their market position,” said Michael Pachter, an analyst at Wedbush Securities who rates Amazon the equivalent of a hold. “Disney can’t cut them off, and Amazon can cut Disney off, so I would say Amazon has the leverage.”
Home Media Magazine reported the disappearance of the pre-order option for some Disney DVDs, also including Muppets Most Wanted and Million Dollar Arm, last week. When Amazon removed pre-orders for Warner Bros. titles from mid-May to late June, it was the first time it used the tactic during negotiations with a movie studio, Home Media Magazine said.
Studios count on the home-entertainment market, including DVD sales from Amazon, to help deliver profits. In fact few films reach profitability in theatres because studios split ticket sales with exhibitors.
Captain America is the top-grossing movie in US and Canadian theatres this year, with ticket sales of US$259.5 million, according to researcher Box Office Mojo. Maleficent is fourth.
Among the Warner Bros. pre-orders that Amazon blocked for about a month earlier this year were Transcendence with Johnny Depp and The Lego Movie, the second top-grossing movie this year. Those titles are now available.
The e-book precedent
In digital-book sales, Amazon dominates with a 60 percent share of the market, according to Forrester Research. The online retailer also helped pioneer the e-book market with the introduction of the Kindle device in 2007. Last week, Amazon made its case for lower book prices in its standoff with Hachette, saying that sales of titles go up when prices are cut, based on data gathered on its website. For every copy of an e-book that sells at US$14.99, Amazon would sell 74 percent more e-books if priced at US$9.99, the retailer said.
A letter signed by more than 900 authors was published in The New York Times on Sunday, urging readers to tell Amazon Chief Executive Officer Jeff Bezos what they think of the disagreement over the price of digital books. Amazon had itself asked readers to contact Hachette CEO Michael Pietsch last week.
“Just as paperbacks did not destroy book culture despite being ten times cheaper, neither will e-books,” Amazon said in a letter on its website, readersunited.com. “We will never give up our fight for reasonable e-book prices.”
Amazon also appealed directly to authors in a letter last month, offering them all of the proceeds from the sale of any e- book during the dispute.