Amazon.com, Inc. (NASDAQ:AMZN) will win the battle over The Walt Disney Company (NYSE:DIS), considers Michael Pachter, managing director of Wedbush Securities. Pachter together with Bloomberg Intelligence analyst Paul Sweeney discussed about the new feud between these two companies on Bloomberg‘s ‘Taking Stock.’
The latest fight between Amazon.com, Inc. (NASDAQ:AMZN) and The Walt Disney Company (NYSE:DIS) erupted just this week as the Internet retail giant stopped pre-orders for some of the latest movies of the entertainment company including ‘Captain America: The Winter Soldier’ and ‘Maleficent.’
According to Pachter, having pre-orders on films which will come out on DVDs and Blu-rays is one of the ways a studio gets people into physical store as these people will sometimes need to personally pick up their orders. In turn, this may lead some people to buy other merchandise from stores. In the case of Amazon.com, Inc. (NASDAQ:AMZN) and The Walt Disney Company (NYSE:DIS), online pre-orders are a way for Amazon to capture more market share, Pachter noted.
Pachter, who has a ‘Neutral’ rating on Amazon with a price target of $330, added that he believes Amazon.com, Inc. (NASDAQ:AMZN) is looking to get a price break on DVDs from all of the studios. It just so happened that they are targeting The Walt Disney Company (NYSE:DIS) now. He stated that the domestic market for DVDs is probably in the $8 billion to $10 billion range, and Amazon has about 10% share of this market. In terms of Disney DVDs sold by the retail giant, Pachter said it is about 15% to 20% of those $800 million. For pre-0rders of Disney DVDs through Amazon, Pachter mentioned that the amount may be as high as $5 million.
Furthermore, when it comes to this fight between Amazon.com, Inc. (NASDAQ:AMZN) and The Walt Disney Company (NYSE:DIS), Pachter believes that the retailer will be the winner.
“They started with Warner [Bros.]. They are now moving on to Disney. [It] looks like they might have gotten a concession from Warner Bros. I think Disney is not budging so Amazon is fighting back by saying, ‘Fine. Your new movies are not going to show up as pre-orders on our site.’ They will be there when the DVD comes out, but they will not be there as a pre-order which means first-day sales will suffer, Disney will not get as much word of mouth, and Disney probably will not sell as much DVDs in the aggregate. So, I think Amazon wins on this battle,” Pachter said.