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Dave Taylor has been involved with the Internet since 1980 and is widely recognized as an expert on both technical and business issues. He has been published over a thousand times, launched four Internet-related startup companies, has written twenty business and technical books and holds both an MBA and MS Ed. Dave maintains four weblogs: The Business Blog at Intuitive.com, Ask Dave Taylor, Dave On Film, and Attachment Parenting Blog. Dave is an award-winning speaker, sought after conference and workshop participant and frequent guest on radio and podcast programs.

Disney's Blu-Ray Movie Club: The Economics Don't Work

I'm an unabashed Disney fan so when I get an offer via email from the company, I'll give it more than a cursory glance, though it's rarely an interesting deal.

The most recent was the announcement of the Disney Blu-Ray Movie Club, which explained that the offer, as with most 'club memberships', was for a couple of movies at an exceptionally good rate, followed by a requirement to buy more films at a jacked up price to balance out the deal.

In this case, the initial offer is for three Blu-Ray discs for $4.95 each. Not a bad deal for Disney films, but then what?

"As a Disney Movie Club member, all you need to do is buy 5 movies at regular Club prices in the next 24 months (starting at $29.95 per Blu-ray disc), plus shipping and processing of $3.95 for the first title in each order, and $1.49 for each additional title in that same order."

So let's assume that you buy five Blu-Ray discs, at once, for $29.95 per disc, after having bought the initial three at $4.95 each, with free shipping.

That's:

    ( 4.95 * 3 ) + ( 29.95 * 5 ) + 3.95 + (1.49 * 3) = $173.02

Given that's for eight DVDs, that works out to $21.62/disc. Not bad. But then again, a bit of research on Amazon.com reveals that Wall-E on Blu-Ray, for example, costs $19.99 for the two-disc set, Bolt three-disc set is $23.99 and the adult No Country for Old Men is $19.49.

So how does this work? It's all about the mailing and the default action. The "Club" sends out a mailing every four weeks and when you receive that mailing...

"You can choose to receive the Featured Title, an alternate, or no movie at all. If you do not inform us of your choice within 10 days or by the date specified on the card (either by returning the card, visiting the website, or by calling the 800 number on the card), the Featured Title will be automatically shipped to you."

In all likelihood, the featured titles are not going to be the lower-priced $29.95, but rather $35.95 or even higher. Now, let's do that math again, with the assumption that four of those five discs you buy are actually $35.95 instead. Now the grand total for those eight discs is $197.02. Divided out, that's $24.62.

But wait, if you are going to be getting these discs by default one per month, then your shipping goes up too, from $1.49 to $3.95. New total: $206.86. New per disc: $25.85.

And did I mention tax? They don't say, but I expect that with the proliferation of Disney Stores, people in just about every state are going to pay at least 8% sales tax, pushing up those discs to $27.92 each.

Suddenly those $19.99 discs via Amazon.com sound pretty good after all. Get free super-saver shipping from Amazon and you're looking at a total savings of $63.49.

Now those monthly mailings can be pretty fun, I admit: I was a long-time member of the History Book Club because I liked to browse through the catalog, but is it worth $63.49 for that privilege when for $9.95 you can get a year's subscription to Disney Family Fun magazine and, I'm sure, get all the ads and a few decent articles too?

Now I admit that there are probably some errors in my calculations here, and clearly some assumptions about pricing differences, but I'm always intrigued by these sort of offers, so it's quite illustrative to run the numbers and really understand the reality of an offer of this nature.

But that's just me. Perhaps you're already a member? If so, how's it going for you?

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