Revamped MovieBeam Seeks Slice of VOD Pie

With financial backing from leading technology players and venture capitalists, The Walt Disney Company has spun off its MovieBeam video-on-demand (VOD) project into a standalone company and launched the service in 29 U.S. markets, reaching nearly half of all U.S. households. But will consumers bite on the clunky and pricey offering? MovieBeam uses over-the-air datacasting technology to stage movies on a special set-top box equipped with an antenna and hard drive. Subscribers then have access to a line-up of 100 movies available on demand, with 10 new films offered per week. Some movies are available in high definition. Nice idea, but the implementation is costly for consumers and requires yet another box in their entertainment center. The advertised price of the MovieBeam System is $199.99 after an introductory rebate of $50. There is a one-time service activation fee of $29.99. Movie-rental prices are $3.99 for new release titles and $1.99 for library titles, with a $1 premium for HD movies. Each rental covers a 24-hour viewing period during which customers can watch a movie as many times as they like, with full video playback functionality. The new MovieBeam Inc. is fueled by $48.5 million in series A financing round. Investors include Disney, Cisco Systems, Intel Capital, Mayfield Fund, Norwest Venture Partners, and VantagePoint Venture Partners. The MovieBeam player, which is co-branded with Cisco's Linksys division, features a 160 GB hard drive and standard video and audio inputs. The player also includes Ethernet and USB 2.0 ports, which the company says will enable broadband connectivity later this year. Now that is potentially interesting, particularly since the MovieBeam supports Internet-friendly audio and video formats, including Windows Media Video 9 (VC-1). Initial MovieBeam launch markets include Atlanta, Baltimore, Boston, Buffalo, Chicago, Cleveland, Dallas, Denver, Detroit, Houston, Jacksonville, Las Vegas, Los Angeles, Memphis, Minneapolis, Nashville, New York City, Orlando, Philadelphia, Phoenix, Portland, Salt Lake City, San Antonio, San Diego, San Francisco, Seattle, St. Louis, Tampa, and Washington, D.C. The MovieBeam System is being sold by major national consumer electronics retailers, including Best Buy, CompUSA and Sears. Should cable operators be worried? No more than they are by Blockbuster and Netflix, as MovieBeam is positioning itself to consumer as a better alternative to movie rental services. However, were MovieBeam technology embedded in a true PVR device, perhaps one that is also able to function as a digital cable set-top box through CableCARD or DCAS compatibility, it would be a formidable offering.
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