As products move through the product life cycle, manufacturers face increased competition from direct competitors as well as from substitute products. Profit margins fall as competition increases, and once-strong product performers may fall by the wayside. One way for companies to counteract this problem is to develop new uses for existing products, or to have their own substitute products enter the market. In doing so, they run the risk that they will dilute the performance of the original product, but they may also gain market share that they might not otherwise realize. This research examines the recently announced strategy of Disney in the disposable DVD market, and considers the theory behind the company's reasoning.
According to Daily Variety, Disney will begin test marketing so-called disposable DVDs in four cities beginning in August 2003. Starting with eight titles, none of which include any of the studio's animated offerings, the company will determine if this is a viable product offering. The titles slated for inclusion in the test include some that were box office hits (Signs and The Recruit) as well as some that had more limited box office appeal (Frida, and Rabbit-Proof Fence) (Hettrick & Sweeting, 2003).
The limited-play DVDs can be played on any standard DVD player, but only for 48 hours after their packaging is removed. After that, they are useless as playback media. The company is targeting the rental market and intends to price the limited play DVDs at one or two dollars above the standard rental fee. In addition, the limited play DVDs will be available at nontraditional DVD outlets, including convenience stores and supermarkets. The limited play DVDs will not contain any of the extra features found on DVDs designed for home video libraries, and Disney intends to wait at least several weeks after a film enters the traditional DVD market before m
...