The Walt Disney Company (DIS): Amazon.com, Inc. (AMZN) Using its Market Position to Squeeze Studios on DVD Pricing

Amazon.com, Inc. (NASDAQ:AMZN) quest to gain control over online pricing has seen it block pre-orders for The Walt Disney Company (NYSE:DIS)’s upcoming summer hit movie “Captain America; The winter soldiers among other titles in the disk form. The latest move by Amazon is clear indication that Amazon does not rely on Film Studios according to, Rishaad Salamat, in an interview on Bloomberg Business. The move essentially outlines the lengths that Amazon is willing to go to put pressure on its vendors through keeping certain items away from consumers.

Amazon.com, Inc. (NASDAQ:AMZN)

“[...] What Amazon.com, Inc. (NASDAQ:AMZN) has done is they have basically understood this, they have grown quite strong. They know the film studios is dependent on them more than they depend on the film studios and what they have done recently is that they have blocked the pre-order option for DVD, not for online streaming version, the DVD. So this one, for example, Captain America you can’t get it right now before it is released,” said Mr. Salamat.

The Walt Disney Company (NYSE:DIS) is not the first company that Amazon.com, Inc. (NASDAQ:AMZN) has aimed an arrow at, the company’s struggles with media outlets has intensified in the recent past as the company tries to avert the pressure it has been receiving from its shareholders to reduce losses. Amazon is already entangled in a book related tussle with the giant French book publisher, Hachette.

The contentious issue, especially with book publishers, has always been on the amount that Amazon.com, Inc. (NASDAQ:AMZN) buys the books and the end prices that the end consumers see. Amazon has always looked for avenues where its end returns could always be greater, with Publishers, on the other hand, demanding for better pay for their work.

“It’s been an argument between the price of DVD’s or the price of books. You know, “how much do I buy from you as a wholesaler and how much do I sell it out to the public” and I think the problem with the publishers is that we have gone from,  books in the bookstore to hardcopy in the bookstore to paperback in the bookstore to paper books in the online to ebooks online. [...] What Amazon is saying, “the cheaper it gets, the more titles I can sell,” I guess what the publisher is saying, “I don’t want to commoditize”,” said Mr. Salamat.

Analysts on Wall Street consider that Amazon.com, Inc. (NASDAQ:AMZN) is considerably squeezing studios like The Walt Disney Company (NYSE:DIS) on DVD pricing given its huge market position in the space. Amazon back in June removed pre-orders of titles from Warner Bros a clear indication it is ready to use the tactic for the long haul.

Disclosure: none

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