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Thursday, February 16, 2006

An in-depth look at MovieBeam

Disney's joining the ranks of 2929 Entertainment and IFC Films: companies not afraid to tinker with traditional movie release windows.

Yesterday, Disney announced that it was reviving its MovieBeam video-on-demand service, which was tested last year in three markets. Disney movies will be available through the MovieBeam service the same day they're released on DVD - rather than 30 to 45 days later, which is the traditional studio practice. (Films from other studios will still be held until at least a month after their DVD release.)

Merissa Marr of the Wall Street Journal writes:

    MovieBeam plans to transmit 10 new movies a week to an antenna in a customer's home over broadcast signals leased from the Public Broadcasting Service's digital-content delivery unit, National Datacast Inc. MovieBeam's set-top box will store 100 movies at a time that, once selected, can be viewed over a 24-hour period with the same playback functions as a DVD.

    MovieBeam's set-top boxes will be sold at retailers, including Best Buy Co., for $199.99 after a rebate, with an activation fee of $29.99. Movies will cost $3.99 for new releases and $1.99 for library titles. The service will offer high-definition titles for an additional $1 -- the first time Disney and Time Warner Inc.'s Warner Bros. have offered their titles in a high-definition format for an on-demand service.

    The studios currently licensing their movies to the service are Disney; News Corp.'s 20th Century Fox; Lions Gate Entertainment Corp.'s Lionsgate; General Electric Co.'s NBC Universal; Viacom Inc.'s Paramount Pictures; Warner Bros., and Time Warner's New Line Cinema. Sony Corp. has yet to wrap up a deal with MovieBeam.

The MovieBeam site says that about ten percent of titles will be available in HD.

Three thoughts about Moviebeam:

1. Asking consumers to buy a special purpose box - one that offers a limited selection of 100 movies at any given moment - is going to be a tough task. It doesn't play DVDs, it doesn't pull content from the Net, it doesn't let you store and pause live TV. Just gives you access to 100 popular films. From Dawn Chmielewski's piece in the LA Times:

    "It has to be a tremendously compelling offering for you to stack another box in your component set," said Bruce Leichtman, an independent media researcher in Durham, N.H. "Combined with something else, it has an opportunity. When it's a stand-alone device, it's very challenged."

2. MovieBeam is basically anti-Long Tail. They give you 100 of the most mainstream movies; you can't hunt for (or get recommendations about) interesting niche content that might appeal to you specifically, as you can with Netflix

3. But MovieBeam shows that when studios want to make a new technology succeed, they can change long-standing business the lag between DVD release and the video-on-demand window. If MovieBeam succeeds - a big 'if' - I wonder if other studios who supply films to the service will be tempted to follow Disney's lead. If they do, will that make Wal-Mart (the country's biggest DVD retailer) angry?

Here's an interesting interview with MovieBeam marketing exec Carl Crabill. Here's the SJ Mercury News coverage, with a bullish quote from analyst Tim Bajarin. has some background on the earlier test of MovieBeam. The earlier incarnation was entirely Disney-owned. The Mouse is still the largest shareholder, but several other investors, including Mayfield Fund, Intel Capital, and Cisco Systems have joined in. (The MovieBeam set-top box carries the Linksys brand name; Linksys is owned by Cisco.)


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