Amazon and Disney seem like they are close to settling a dispute that lasted nearly two months.
During the dispute, Amazon stopped pre-orders for Disney-released DVDs. However, upcoming DVD releases by Disney including Maleficent, Million Dollar Arm, Guardians of the Galaxy, The 100-Foot Journey, and Planes: Fire and Rescue have now been made available on Amazon since last week.
According to sources by the Wall Street Journal, the dispute between Amazon and Disney stemmed [subscription required] from a variety of reasons. Included in the reasons are pricing levels and promotions on the website of Amazon.
One other reason for the dispute is determining which company between Amazon and Disney will make up for the difference when Amazon loses money to be able to match up with the prices being offered by its competitors with the materials that Disney is looking to sell through them.
While the return of Disney DVDs on Amazon signal a truce of some sort over the previously reported dispute, it is still not clear whether Amazon and Disney are close to signing a new long-term agreement or have only progressed their discussions far enough to the point that Amazon has become willing to make concessions in bringing back the Disney DVDs for sale on its website.
The dispute, which originated some time in August, is seen as Amazon's method of coercing Disney into entering agreements with modified terms that would allow Amazon to gain a bigger share in the sales of Disney DVDs.
While the pre-orders for Disney DVDs were blocked, pre-orders for digital versions of the movies were still allowed through Amazon Instant Video, signifying different terms between the digital distribution and physical distribution of a movie.
Analysts said that Disney should not be overly concerned on the dispute with Amazon, as DVD sales make up only a small part of the company's total revenue. However, sales of DVDs, especially made through Amazon, are still important because it extends profits for the movie studio, especially for movies that were not so popular in the box office.
"They are squeezing studios on DVD pricing, understandable given their market position," said Wedbush Securities analyst Michael Pachter. "Disney can't cut them off, and Amazon can cut Disney off, so I would say Amazon has the leverage."
"I'd say the companies are about as evenly matched as they get, but Amazon may have more leverage as the distributor because it can wait things out longer than Disney," said S&P Capital IQ media and entertainment analyst Tuna Amobi.
