Amazon (AMZN) just expanded Disc+, a program that gives customers access to a downloadable movie when they order the physical DVD. Now offering more than 10,000 movies, Amazon is a proverbial friend to fans of physical media and a real foe to movie purveyors Best Buy (BBY) and Netflix (NFLX).
Previously supporting a small number of movies, Disc+ makes the digital version immediately downloadable after the physical version is purchased. The obvious benefit is that consumers don't have to wait for the package to be shipped and delivered, which is the main draw of local big-box stores like Best Buy and, more pointedly, streaming services like Netflix.
Strategically, Amazon is carving its own niche for the digital media holdouts. The writing is on the wall for DVD, HD-DVD and Blu-Ray:
- Netflix has added a streaming-only membership which will eventually take over the (expensive) movie mailing
- Best Buy is cutting back on physical media sales, concentrating on hardware instead
- Blu-Ray sales have dropped dramatically in 2010
But what about the millions who want a physical version of what they just purchased? Physical movie sales are dropping, but there are reasons why DVDs still represent millions to the film industry. By expanding the Disc+ plan, Amazon is able to ease classic cinephiles into the online age. And, more importantly, it has the opportunity to keep them as streaming or download customers once they decide to cross over -- an advantage no other competitor can claim.