Disposable DVD's Far from Being a Sure Bet (Reuters)

Discussion in 'DVD Video' started by Tarkus, Sep 14, 2003.

  1. Tarkus

    Tarkus Guest


    Disposable DVD's Far from Being a Sure Bet
    Sat Sep 13, 9:17 AM ET
    By Ellis Mnyandu

    NEW YORK (Reuters) - Disposable DVDs may have a short shelf life in more
    ways than one.

    With major retailers such as Wal-Mart Stores Inc. (NYSE:WMT - news)
    already selling more cut-price DVDs, industry experts say it is far from
    certain whether consumers would be eager to shell out $7 for a DVD movie
    they can't keep or watch beyond a 48-hour deadline.

    This week Buena Vista Home Entertainment, the home video arm of Walt
    Disney Co. (NYSE:DIS - news), began distributing a limited number of
    movie titles on the self-destructing DVD format -- known as EZ-D -- to a
    few U.S. markets.

    The EZ-D comes vacuum sealed in plastic. It looks and plays like a
    regular DVD but once it is exposed to air, consumers have just 48 hours
    to watch it before it goes black and stops playing.

    But as discount stores, supermarkets and even drugstores stock up on
    lower-priced DVD movies to lure customers in a downbeat economy, analysts
    see the EZ-D struggling from stiff competition.

    Video-on-demand and pay-per-view movies from satellite or cable also pose
    a challenge to the EZ-D, whose key selling points are convenience, no
    late fees and no endless trips to return movies to the corner shop.

    Dennis McAlpine, an analyst with McAlpine Associates, said the EZ-D was
    more "a learning experience for Disney than it is an opportunity to make

    Blockbuster Inc. (NYSE:BBI - news), the world's leading movie rental
    chain, said it was skeptical that a DVD that goes blank 48 hours after
    being viewed would have much appeal.

    "We think the consumer proposition on this (EZ-D) disc is pretty tough,"
    Blockbuster Chairman and Chief Executive Officer John Antioco told
    Reuters in a recent interview.


    For decades, movie rental chains like Blockbuster have benefited from
    charging late fees on rentals. In some instances these late fees have
    doubled the cost of a rental, but provided no additional revenue to the
    studios that make the movies. As a result, McAlpine said, studios will
    keep trying to find alternative distribution channels, like the EZ-D.

    According to McAlpine, the EZ-D underscores some of the frustration
    studios have about losing out to rental chains, who are now cashing in
    from selling movies in addition to renting, which generally has higher

    Even so, the home movie industry -- which includes rentals -- remains a
    lifeline for studios to make money after movies are off the theatrical

    Adams Media Research estimates that the home movie industry represented
    about $12.3 billion, or 59 percent, of the $20.8 billion estimated
    domestic studio revenue in 2002. Studios typically enter into
    revenue-sharing pacts with movie rental chains.

    In exchange for buying agreed-upon quantities of DVDs -- sometimes at
    reduced or no up-front cost -- rental chains then share agreed-upon
    portions of the revenue they derive from the movies with the applicable

    Mark Zadell, an analyst at Blaylock & Partners L.P., said that at about
    $7 a piece, the limited-life EZ-D could be seen by consumers as "a little
    expensive." In contrast, a typical 5-day rental costs about $4 at some
    movie rental outlets.

    But in time, Zadell added that the EZ-D could well appeal to those
    looking for convenience, "depending on how pervasive it becomes."

    Discounter Wal-Mart, which sells DVDs for as little as $5.88, better
    illustrates just how tough the days ahead may be for EZ-Ds.

    The world's largest retailer now also rents DVD movies just like Netflix
    Inc. (Nasdaq:NFLX - news), which pioneered Internet-based movie renting
    for a monthly fee with no due dates or late charges.
    Tarkus, Sep 14, 2003
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  2. Tarkus

    Scot Gardner Guest

    <<Mark Zadell, an analyst at Blaylock & Partners L.P., said that at
    about $7 a piece, the limited-life EZ-D could be seen by consumers as "a
    little expensive." In contrast, a typical 5-day rental costs about $4 at
    some movie rental outlets.Discounter Wal-Mart, which sells DVDs for as
    little as $5.88, better illustrates just how tough the days ahead may be
    for EZ-Ds.>>

    <<Dennis McAlpine, an analyst with McAlpine Associates, said the EZ-D
    was more "a learning experience for Disney than it is an opportunity to
    make money.">>

    There will be a tremendous demand for EZ-Ds, if they are hot new titles
    which are exclusive to the time-destruct format. Right now, the plan is
    to release the throwaway DVDs a few weeks AFTER the title is released on
    traditional DVD.

    This limited test marketing experiment is being done only to test
    whether or not the throwaway DVDs will perform as expected. Will people
    buy EZ-Ds? How much will people pay for EZ-Ds? Will EZ-Ds actually play
    for 48 hours and have a shelf life of 1 year? The current marketing plan
    states that EZ-Ds will be released several weeks after the real DVD
    comes out. I feel that this statement has been made to pacify the
    anti-DIVX radicals who would become very agitated if they knew the

    Although I have no documentation for my supposition, here is what I
    think will come next. If the test marketing demonstrates that EZ-Ds
    perform as expected, Disney will quickly reverse the current EZ-D
    marketing model so that hot new titles premier on EZ-D, and then, maybe,
    these titles will be followed up, in a few months, with a real,
    full-featured DVD. This will allow Disney to grab most of the rental
    market, which is what they have always wanted to do.

    If people want to see the movie badly enough, they will buy the
    overpriced, throwaway DVDs. Don't forget that hundreds of thousands of
    people paid $100-$200 extra for DVD players with the DIVX "feature" so
    that they could watch disposable Disney pan and scan DIVX disks.

    The appearance of an exclusive title on EZ-D is no guarantee that it
    will ever appear on DVD. _Ed Wood_ was an exclusive Disney DIVX title
    that has still not made it to Region 1 DVD -- 4 years after the demise
    of DIVX Part I.

    EZ-Ds are nothing more than DIVX Part II. Exclusive titles will be a key
    factor in the success of EZ-D.

    Scot Gardner, Sep 15, 2003
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  3. How many people don't live near a Blockbuster that returning a video is such a
    huge burden? A rental at BBV is $3-4. Is it worth another $3 to not have to
    return it?

    Remove "moc" to reply.

    Whoever says "Nothing is impossible" has never tried to slam a
    revolving door.
    - Willy Walker
    Sydney Assbasket, Sep 15, 2003
  4. Tarkus

    Teller Guest

    On Sun, 14 Sep 2003 16:40:44 -0700, "Scot Gardner"
    EZ-Ds may seem to be a good idea, but look at the present trend for a
    moment, and you can see why it may have difficulties. For example, we
    have several local outlets (Wherehouse) in the Seattle area that rent
    DVDs for $1.00/night. Blockbuster is also trying (at select
    locations) a fixed-charge monthly rental fee, and also offers $1/night
    rentals on select titles. My cost for Netflix rentals averages about
    40 cents a movie if I return them immediately. It wouldn't make any
    sense at all to spend $7 for a self-destructing DVD when alternatives
    are so much cheaper.

    And speaking of these EZ-Ds that deteriorate with contact to
    air--what's to prevent a purchaser from (1) freezing them to retard
    the decomposition or (2) overcoating the DVD with a clear spray to
    eliminate air contact? In any case, it only takes about 15 minutes to
    rip one and then you can throw it in the shitcan for good. Moreover,
    if EZ-Ds become cheap enough, they'd be a good format for pirates to
    work with (prestine, non-scratched surface and no return hassles).
    Teller, Sep 15, 2003
  5. Tarkus

    Tarkus Guest

    Why would you say that? Other than Disney, you seem to be the only one
    suggesting this.
    Why would anyone pay $7 to rip a plain DVD, when they could rent one for
    much, much cheaper, and get more features?
    "I'll catch this bird for you, but it ain't gonna be easy. Bad fish!
    Not like going down to the pond and chasing bluegills and tommycocks.
    This shark, swallow you whole. No shakin', no tenderizin', down you go."

    Now playing: "Patrick Moraz - Impact"
    Tarkus, Sep 15, 2003
  6. Tarkus

    Eric R. Guest

    I have no doubt that Dinsey, being as evil as they are, would love
    this. Fortunately, almost all of their movies are shit anyway, and so
    it wouldn't matter much to me (with the exception of their Miramax
    division, which is only about 90% shit). The only thing that would
    bother me about this is that decent studios might follow suit.

    This format actually wouldn't be so bad, providing:

    a) We were assured that all EZ-D DVD's would also be released on
    regular DVD for purchase, at or about the same time.

    b) EZ-D's had all the features of the regular DVD (extra features,
    widescreen, etc.)

    c) They were more reasonably priced ($7 for a rental!?!? Make it $4
    and we'll talk)

    d) We could be assured that the damn things actually WORK (don't want
    to buy it and open it a few months later only to find the disc has

    Eric R., Sep 16, 2003
  7. Tarkus

    Teller Guest

    Merely metaphorically speaking...I didn't say they WERE a good idea.
    IMHO it will prove to be a marketing blunder unless the price can be
    reduced to about $3-$4.
    Of course nobody would...but you'd better wake up & smell the
    roses--where do you come up with this $7 figure, are you buying your
    DVDs from some fancy retail joint? I'm talking 40 cents to rent, plus
    about 83 cents for the DVDR. And why would you sacrifice these
    "features" in any case--when ripping a DVD you can take 'em or leave
    'em, it's up to you.
    Teller, Sep 16, 2003
  8. Tarkus

    Tarkus Guest

    I got the $7 figure from Disney. That's what they're charging for this
    Precisely my point. Why would even pirates want to bother with these
    disposable DVDs? Where is the upside?
    Tarkus, Sep 16, 2003
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