MOVIEBEAM: BACK FROM THE DEAD

What Everyone Is Talking About Today

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NEW YORK (AdAge.com) – It’s Valentine’s Day, but here at Watercooler, it seems more like Halloween, what with products long thought dead rising up and being foisted upon 29 unsuspecting U.S. cities. Walt Disney Co.(now with new partners), a year and a half after it tested a video-on-demand system called MovieBeam in three cities, is ready to go national with it today. We have just one question, Why?

When even Blockbuster has figured out that consumers would happily avoid actually showing up in a video store to get their weekly fix of entertainment, you know it’s time to figure out a new model for renting movies. But MovieBeam as an answer seems remarkably retro in this age of Netflix, broadband video and other, easier VOD options.

MovieBeam, the new service introduced in 29 markets today, will cost consumers $230 for the box you hook up to your TV to store the movies, according to this morning’s New York Times' reckoning ($250 price tag, minus $50 rebate, plus $30 activation fee). Then, every time you request a movie from the box, you’ll be charged $3.99 if it’s a new movie, $1.99 if it’s an older one. And it’s not like you get an unlimited choice of movies, since MovieBeam will only offer 100 titles at a time, primarily new releases. And you only have 24 hours to watch it from the time you order it.

It seems like an odd deal. Who are they hoping to persuade to pony up $230 just to get access to movies that are seemingly available everywhere? If you already have 92.1% of U.S. households paying for cable and satellite services, which offers plenty of pay-per-view channels, and NetFlix and Blockbuster both offer to deliver up to three movies at a time to your home, shipped free both ways, for less than $20 a month, with an incredibly deep catalog to choose from, it seems the marketplace for those willing to pay for yet another box to sit on top of their TVs that then requires them to pay for each movie to be small at best.

MovieBeam, now backed by Disney, Cisco and Intel, acknowledges upfront that it isn't looking to make MovieBeam a huge product. The Times today writes that Tres Izzard, a former Disney executive who is now CEO of MovieBeam, believes the service will appeal to the 30 million people who rent at least four movies a month. Four-fifths of those rentals, he said, are releases like the ones MovieBeam plans to offer. Then he goes on to say that it doesn’t have to appeal to everyone, since they only need 500,000 customers to break even (this despite selling the set-top boxes at a slight loss).

So there’s apparently a half million people out there that Disney thinks are so lazy or impatient that $230 is worth it to avoid driving to a video store or waiting for the mailman to show up. Yeah, that’ll work. By the way, that 92.1% universe we mentioned up above? It adds up to 99.8 million subscriptions to cable and satellite services. Maybe MovieBeam should next work out a service to attract the other 99.3 million consumers.

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