Forbes Columnist: Amazon's Tussle with Disney Could Backfire

Wednesday, 13 Aug 2014 08:56 PM

By John Morgan

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In his battle with American icon Walt Disney Co., it’s starting to look like Amazon CEO Jeff Bezos is becoming increasingly combative in the pursuit of profit, a Forbes column argues.

Forbes said the fact Disney has stopped taking pre-orders on new Disney movies like “Maleficent” shows Amazon is “willing to pay hardball with suppliers.”

Amazon is already embroiled in a public struggle with book publisher Hachette over selling prices for Hachette e-books. Amazon wants the prices lower for customers, but Hachette claims the online retail behemoth is trying to corner the e-book market at the expense of authors.

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“Now parents looking to ensure that their kids are the first ones on the block with the latest Disney movie are getting thrown into the fray,” wrote Forbes columnist Dorothy Pomerantz. “But by taking on Disney, is Bezos going too far?”

Forbes predicted Bezos’ tougher stance with content providers like Disney could eventually
backfire, concluding that “if Amazon finds itself with a reputation as a company that at any
moment stops offering content from your favorite supplier, people will be less inclined to buy into the Amazon ecosystem.”

There is always the possibility consumers could shift to another retail source. “Apple has a book store, and it’s easy enough to buy things on Amazon directly from an iPad or iPhone,” Pomerantz said.

At the end of the day, Amazon does not really want to risk alienating Disney because of the giant trove of branded entertainment treasure the company owns, Pomerantz concluded.

“Disney’s content is must-have for any company that wants to compete in the content selling and streaming business. That gives Disney a lot of leverage in any disagreements.”

The Wall Street Journal reported its sources said Disney’s conflict with Amazon is not only about product pricing, but also encompasses promotion and product placement on the Amazon website, and who is responsible when Amazon loses money to match the prices of competitors.

One problem for Amazon, according to those sources, is that Wal-Mart, Best Buy and other brick-and-mortar retailers “sometimes charge less than the wholesale price for a new disc to
lure people into stores so that they will purchase other, more profitable items.

“Amazon often tries to match those prices, but doesn't reap the benefits of drawing customers into a physical showroom,” the Journal said.

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