Is Disney Movies Anywhere a Game Changer?
Walt Disney , in alliance with Apple , recently launched a new movie service called Disney Movies Anywhere, or DMA. This service will function as a "digital movie locker," in which customers can save their copies of Disney, Marvel, and Pixar movies in the cloud. To do this, they can either use a code in the box of their physical movie or purchase the movie online.
Users must link their DMA account to iTunes, which will automatically give them a free digital copy of The Incredibles upon registration. In that way, only users of iPhones, iPads, and other Apple devices can access the service, which limits its availability. Therefore, the concern is whether this move is beneficial for the company. In theory, DMA has the potential to improve revenue from home entertainment. However, the concern is that the success of this move can be also be hindered by competitors like Netflix , Amazon.com's Prime Instant Video, or Walmart's Vudu.
The competitive media streaming service market
One apparent problem is that DMA is entering a market in which there are already several well-positioned companies like Netflix, which displays Disney's classic movies, or Vudu, which provides Disney movies through the use of a code.
However, there is a certain relief in regard to Netflix, because this company will not be able to offer Disney's new movies until 2016. On the other hand, DMA will have new movies available as soon as DVD and Blu-ray versions are released.
DMA users can purchase the movies they want, as if they were the DVD/Blu-ray version. The difference is that, now, they can do it online and store them in the cloud. In that sense, sales of movies through the new service will not affect the already-established contract with Netflix, since the former is related to the customer's purchase of movie copies and the latter to subscriptions.
Strong substitutes are already available, but Disney's charm is missing
Netflix can still get in the way, in the sense that many people can just settle for classic Disney movies available with their subscriptions. The same applies to other media streaming services like Vudu and Amazon Prime, which are strong substitutes to DMA, given the fact that they offer far more content.
The positive side is that Disney's strong branding makes it somewhat unique. The release of hits like Frozen will likely attract families and Disney fans to DMA. However, families will need to have iTunes installed and running first, which limits the availability of the service.
Limited availability is a big problem
Although Disney's new service should generate decent revenue, it is not a game-changer in its current Apple-only presentation. Currently, Android has 79% of the smartphone market, while Apple iOS only has 15% . In regard to the tablet market, Android holds 62%, while Apple iOS has only 32%.
While iTunes can be downloaded as an app in Android devices, it cannot play movies and TV shows due to Digital Rights Management protection policies. So, owners of Disney movies who also use Android devices have limited access to DMA. Moreover, when it comes to streaming television set-top boxes, iTunes is also unavailable in many devices, except the Apple TV.
Final Foolish thoughts
Overall, DMA seems like a clever move in the sense that it can further monetize Disney's plethora of more than 400 movies, and offer customers an improved way to purchase and store their favorites. Moreover, the branding makes it a unique service targeted toward families who will demand the digital release of recent hits, like Frozen. Also, it appears DMA does not interfere with the contract Disney already has with Netflix.
However, DMA's limited availability is a major concern. Android users will have a hard time accessing Disney movies on their smartphones or tablets. In addition, not every Disney fan will be compelled to get the Apple TV just to access DMA on their televisions. Apparently, Disney is negotiating with other platforms, including Android, about providing DMA, which seems like a logical way to increase the benefits of its new movie service.
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The article Is Disney Movies Anywhere a Game Changer? originally appeared on Fool.com.Victoria Zhang has no position in any stocks mentioned. The Motley Fool recommends Apple, Netflix, and Walt Disney. The Motley Fool owns shares of Apple, Netflix, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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