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MovieBeam Gets New Investors

9 Feb, 2006 By: Holly J. Wagner

MovieBeam continues to flicker. Disney has spun off the direct-to-home content network launched in 2003, selling a $48.5 million stake in the company to investors, including networking giant Cisco Systems. Disney has retained the majority interest in MovieBeam.

The spinoff was disclosed in a filing with the Securities and Exchange Commission (SEC), according to The Wall Street Journal. Other investors included Intel's Intel Capital, Mayfield Fund, Norwest Venture Partners and Vantage Point Venture Partners.

Cisco has been quietly cobbling together a digital delivery system. It bought set-top box maker Scientific-Atlanta last November for $6.9 billion. Scientific-Atlanta has shipped more than 23 million digital set-top boxes, and most cable systems in North America use at least some of the company's products.

Set-top boxes that deliver Internet content directly to the TV are the holy grail for movie download sites such as Movielink and Cinemanow, and Cisco CEO John Chambers said at the time that the deal would help Cisco clients — mostly telecommunications companies — deliver video content over the Internet.

Earlier, the company bought KiSS Technology, which makes a networked DVD player.

Cisco disclosed last week that it had invested in MovieBeam, but didn't reveal how much.

Disney launched MovieBeam in three test markets in 2003. The idea was to offer set-top boxes with 100 movies preloaded and a rotating schedule of new content available each week. Customers paid $8.99 for the service and $1.99 to $3.99 per film for premium movies.

The company suspended the service last year and said it planned to upgrade the architecture.

Disney EVP of ESPN Enterprises Salil Mehta will sit on the new board of MovieBeam, along with Norwest partner Matthew Howard, Mayfield managing partner Kevin Fong and Alexander Izzard, a former Disney employee who was involved in the original MovieBeam launch, according to the Journal. Izzard also will serve as chief executive of the venture.

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