48 Hours on DVD isn't just another potential title in your DVD viewing library. If Disney
Come August, Disney will begin testing the new EZ-D format based on Flexplay's "self-destructing" technology. It's ingenious, really. Once the EZ-D is removed from the packaging, its exposure to oxygen interacts with the coating on the disc to make it inoperable roughly two days later.
The DVD with a limited shelf-life isn't new. Circuit City
So, is this yet another case study for the elephant's graveyard or will it take off like Dumbo?
I'm inclined to bank on the latter.
DVDs are cheap. You are finding them in everything from cereal boxes to bonus freebies tacked on to pre-recorded music CDs to help ward off MP3 piracy by motivating the initial purchase. They are also light and compact, igniting the Netflix
Does this mean that the success of EZ-Ds will spell an end to the DVD rental specialists? Not really. Netflix is on an entirely different level of service, banking on its breadth of titles, free home-delivered convenience, and unlimited holding periods to win over its established base of users. Blockbuster and Hollywood will face a more direct threat, until one realizes that they are also the ideal clearinghouses to stock EZ-Ds in bulk if the format takes off. That would spare patrons the worst half of the travel time: the rushed trip back to the store to return the rentals.
For Disney, it will give its struggling Disney Stores a fresh product to drive even more incremental sales. More importantly, for the company's recent wave of substandard animated sequels and direct-to-video rush jobs, paying $4-$5 for a two-day taste may be more lucrative than titles that wouldn't sell much at all otherwise. And, yes, what's to stop Disney from setting up a policy where you can return a blackened EZ-D and get its original purchase price back as a discount on the purchase of the actual working DVD of the same title?
Did someone say McDonald's?
Yet the real mother lode here for Disney, Flexplay, and even GE lies in one of Disney's most prominent partners. We're talking about a struggling company with more than 31,000 distribution outlets under its belt. We're talking about a fast-food chain that is geared for drive-thru convenience in most of those locations and would relish the opportunity to tack on a quick low-ticket purchase to any passing transaction.
Will environmentalists cringe at the notion of a stack of disposable discs piling high in a landfill? Perhaps, but while the EZ-Ds are not reusable they are recyclable. Besides, is that image any worse to an eco-minded thinker than a yuppie in his gassed-up SUV making a second trip to the video store to return the movie?
If so, will someone please make sure that Michael Bolton, Britney Spears, and the Backstreet Boys hold off on any new CD releases until we figure out the best way to get rid of their previous ones?
The first batch of EZ-D titles won't be Disney's animated classics. That's actually a good call since those releases tend to lend themselves to perpetual viewing by kids who have no problem watching The Lion King or Toy Story dozens of times. It will be Disney's live action flicks like The Recruit, Frida, Signs, and The Hot Chick that get served up as trial balloons over the summer.
Fade to black
As an investor whose gut instinct is telling him that the EZ-D will be huge, it's a shame to find out that Flexplay is not publicly traded. Other private companies such as Spectro Systems have come up with different coating technologies. The SpectroDisc process starts when the DVD is first played, and it eventually wears away to an unplayable state in a hue of blue.
Is the DVD industry about to see black and blue? I think so. It seems unfathomable now, but just wait until Domino's or Papa John's
There's a bright, brave new world out there for the movie industry. Ironically, yet oh-so-lucratively, it's about to fade to black.
Rick Aristotle Munarriz actually doesn't have a beef with Michael Bolton, Britney Spears, Backstreet Boys, or environmentalists. He does own shares in Netflix and Disney. Rick's other stock holdings can be viewed online, as can the Fool's disclosure policy.