Before I even post about this let me just say that I do not own a video game console (XBox, PS2, etc.), all of my CDs have been ripped and transferred to iTunes and my various iPods, and I watch probably 60% of movies on DirecTV. Ok, so with all that in mind, here I go:
According to this post on Popgadget, Discwarranty.com will sell you a policy for $59.99 per year that will replace or repair your damaged CDs, DVDs, or game discs within 3–5 days of a claim. Reading through the FAQs this seems like it would be a good investment if you listen to a lot of CDs or watch a lot of DVDs — you would have to have 5 CDs a year (at an average cost of $12 each) repaired or 3 DVDs a year (at an average cost of $20 per DVD) repaired to make the service worthwhile. However, if you own a game console and a lot of games, this service seems like it would be an extremely worthwhile investment with the average cost of a PS2 or XBox game being around $40. I haven’t seen pricing on the games for XBox 360 or PS3, but I would imagine they will be in the $40–$60 range once those systems are released, and with the amount of data that they will be backing on the game discs, a small scratch could really ruin your investment.
My guess is that Discwarranty’s business model is based on an anticipated relatively high percentage of reparable discs or is based on the assumption that most subscribers will have replacement requests that are less than what they spend annually. Also, it is important to note that nowhere on the Discwarranty site does it say that you will receive a brand-new, factory-sealed replacement disc — yes, that means that you will most likely receive a “refurbished” disc if they have to replace it.