Is Disney Movies Anywhere a Game Changer?

What are the pros and cons of Disney's new movie service?

Mar 5, 2014 at 1:45PM

Walt Disney (NYSE:DIS), in alliance with Apple (NASDAQ:AAPL), 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 (NASDAQ:NFLX), Amazon.com's Prime Instant Video, or Walmart's Vudu.

Disney

Source: Disney

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.  

Learn to profit from the war for your living room
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple.

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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers