) online pricing war continues. After media giants Hachette and
Time Warner Inc's (
) Warner Brothers, it is Walt Disney Company's (
) turn to feel the heat. Amazon has withheld DVD pre-orders of
Disney's smash hit movies including
Captain America: The Winter Soldier
, repeating its tactics to extract better pricing terms. Neither
party was available for comment.
The sale of movies and DVDs generate only a small part of Amazon's
revenues as compared to stores like Wal-Mart and Best Buy (
), which at times price new launches below their retail cost to
On the other hand, for studios, DVDs and Blu-ray versions of their
movies help generate a significant amount of profit because very
few movies attain profitability in theaters. Given Amazon's clout
in the home entertainment market, it tactfully uses its dominance
by putting pressure on vendors. In this case also Amazon
appears to have an edge over the Hollywood studio.
Amazon has in the past withheld sales of certain products as a part
of its strategy to gain leverage in negotiations with content
providers. It has previously applied such bargaining tactics
against Hachette Book Group by pulling out consumers' pre-orders
for books and postponing shipments of the publisher.
Amazon is facing criticism from authors and other insiders in the
publishing industry, who allege that the e-commerce giant is
exploiting its position as a major retailer to extract better
pricing terms from its suppliers.
While the pricing disagreement between Amazon and Warner Bros. did
not last long, the disputes with Hachette and Disney will likely
The e-tailer is under a certain amount of pressure from investors
who are increasingly unimpressed with its huge investments that
continue to yield low returns because of its aggressive pricing
Amazon currently holds a Zacks Rank #4 (Sell).
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AMAZON.COM INC (AMZN): Free Stock Analysis
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