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Relaunched MovieBeam Smashes DVD Window

14 Feb, 2006 By: Holly J. Wagner

The Walt Disney Co. and its joint investors have broken the DVD window with the reinvented MovieBeam service, offering new theatrical and DTV releases from Disney labels on the same date as the DVD.

Armed with a stable of new investors that include Cisco Systems and Intel, Disney relaunched its recently spun off MovieBeam proprietary video-on-demand system Feb. 14 in 29 cities, including New York, Los Angeles and Chicago.

The service offers instant access to a revolving slate of new releases and catalog titles from most of the major Hollywood studios, including a limited high-definition offering. Sony Pictures titles are absent but a deal is expected.

One-night movie rental prices are $3.99 for new releases and $1.99 for catalog titles, plus a $1 premium for HD movies. The advertised price for a system — a set-top box with a 160GB hard drive, a small indoor antenna to receive new movies and a remote control — is $199.99 after an introductory rebate of $50. There's also a one-time service activation fee of $29.99, but no annual contracts or subscriptions.

“We have built MovieBeam to directly address what's most important to our target customers: convenience, quality and choice,” said MovieBeam president and CEO Tres Izzard. The service will bring “the sizable selection of the back wall of the video store directly into customers' living rooms,” he said.

The only day-and-date title at launch was Proof, but others had DVD-to-VOD windows of as little as seven days (see chart).

So far, MovieBeam is the only prominent VOD service to offer titles day-and-date with DVD.

Spokespersons for Web-based VOD service Movielink declined comment. A spokesperson for Web-based VOD service Cinemanow said the company had not yet discussed the option with Disney. Blockbuster Inc. did not respond to a query.

The announcement knocked a few pennies out of traditional rentailer stocks, but at least one analyst sees little threat to the industry.

“I think that the impact will be relatively minor,” said Wedbush Morgan Securities analyst Michael Pachter. “TiVo was only able to sell 1.5 million boxes on its own over several years. I can't see how MovieBeam sells more than a couple hundred thousand without a compelling content offering.”

He said the breadth of titles on the service also would be an impediment.

“They're going to provide a limited selection, likely not many movies that are big DVD sellers, and mostly catalog,” he said. “Nothing on MovieBeam will be available sooner than on Netflix or Blockbuster, so it's only a matter of convenience, with a huge tradeoff for limited selection.”

The set-top boxes offer access to 100 movies at any given time and up to 10 new titles automatically delivered each week via over-the-air datacasting technology. They are available at Best Buy, CompUSA and Sears; regional and independent retailers; and through several Internet retailers and directly from MovieBeam.

“I'm at a loss to understand why I need to pay $229 for a list of movies selected by Disney that they think I'm interested in,” Pachter said. “I can manage my queue at Netflix or Blockbuster, get exactly what I'm interested in, and keep the $229. That is, unless I value the fact that they save me a trip to my mailbox.”

The system includes an HDMI connection that up-converts standard-definition content when connected to an HDTV; a user interface that sorts movies by title, genre, actor or director, and rating; and personalized spending limits and parental controls.

In addition to Chicago, Los Angeles and New York City, the service is available in Atlanta; Baltimore; Boston; Buffalo, N.Y.; Cleveland; Dallas; Denver; Detroit; Houston; Jacksonville, Fla.; Las Vegas; Memphis, Tenn.; Minneapolis; Nashville, Tenn.; Orlando, Fla.; Philadelphia; Phoenix; Portland, Ore.; Salt Lake City; San Antonio; San Diego; San Francisco; Seattle; St. Louis; Tampa, Fla.; and Washington, D.C.

Disney initially launched the service on its own in April 2003 in a three-city test, then pulled back a year-and-a-half later to develop the technology.

As part of Intel's investment, the companies are collaborating to develop a USB peripheral that will eventually port the MovieBeam service to other devices. The players also feature Ethernet and USB 2.0 ports to enable broadband connectivity later this year. The player is co-branded with Linksys, a division of Cisco, as part of Cisco's investment in MovieBeam. The two companies “intend to explore future joint development opportunities,” according to a press release.

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