Disposable DVD idea may wind up in the trash bin

September 14, 2003

We saw this story a while back now here is the latest. Disposable DVDs may have a short shelf life in more ways than one.With major retailers such as Wal-Mart Stores Inc., 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., 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.

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."

Blockbuster Inc. BBI.N , 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.

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.

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 margins.

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.

Source: reuters.com/