MovieBeam, Inc. is rolling out a new home video system today in 29 U.S. cities. Customers buy a TV set-top box for $199.99 (after $50 rebate) that comes loaded with 100 films. Each week, up to 10 new movies are beamed to the box through the airwaves. The new movies automatically replace older titles so that there are always 100 movies on the box, including new movie choices. No broadband connection is required, but the box does need to be hooked to a phone line. In addition to buying the box, customers have to pay a startup fee of $30 and $1.99 to $4.99 per film viewed. Customers have 24 hours to watch a movie after they order it. Movies can be replayed during the 24 hours but can’t be recorded.
The startup costs for an unproven service seem a bit high to me. MovieBeam does, however, have a couple advantage over video on demand offered by the cable companies: (1) you don’t need cable to use the service so there is no recurring monthly fee (here in Cincinnati, if we want video on demand we have to upgrade to digital cable which adds about $10 a month to our bill plus additional fees for any movies we watch); and (2) MovieBeam will beam some of Diseny movies to the box the same day they are released on DVD (video on demand doesn’t get them for up to 45 days after the DVD release). I might be tempted to try the service if the startup price comes down to $100 or if they add TiVo to the box.
MovieBeam was initially a wholly-owned subsidiary of Disney. In January, Disney sold $53 million of MovieBeam stock in a private placement to investors including Cisco Systems Inc., Intel Corp., Mayfield Fund and Norwest Venture Partners. Disney remains MovieBeam’s largest shareholder. See this Bloomberg article for more details.
