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Disney puts its twist on watching movies at home

By Timothy J. Gibbons
Published by Florida Times-Union on September 30, 2003.

Hoping to attract people who "love movies and love watching them," The Walt Disney Co. rolled out a new video-on-demand service yesterday in Jacksonville, one of the three cities nationally where the product debuted.

MovieBeam, the new service, provides customers with movies through a hard-drive-based set-top box that they rent for $6.99 a month. Movies are then individually rented for $3.99 for new releases such as The Lord of the RIngs: The Two Towers and $2.49 for older films, such as Toy Story. The box will get new releases about a month after they hit video stores.


Starting this week, Jacksonville residents will be among the first in the nation to experience MovieBeam, a new on-demand movie rental service. MovieBeam will give consumers access to DVD and video releases.
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The box comes loaded with 100 movies, with 10 movies being replaced by new offerings -- divided between recent movies and classics -- each week.

"From what we've seen from the research, Jacksonville is exactly the kind of market that would be excited by it," said Salil Mehta, executive vice president of corporate business development for Disney.

Like Salt Lake City and Spokane, Wash., the other debut cities, Jacksonville has a large number of people who enjoy watching movies with friends and family members, are too busy to go to the video store and often end up paying late fees, Mehta said. "They love movies, but don't exactly enjoy the current experience of going to the video store," he said.

MovieBeam will offer movies from almost all of the major studios, with the exception of Viacom Inc.'s Paramount Pictures, with whom Mehta said MovieBeam is still negotiating. Viacom is the parent company of Blockbuster Inc., the country's largest video rental chain.

The new entry into this market is noteworthy from two standpoints: Technologically, MovieBeam differs from other video-on-demand services. Also, from a business standpoint, Disney's entrance is an important move for a large content-provider.

How to sign up

Movies rented through the MovieBeam service can be viewed for 24 hours and can be paused, rewound and fastforwarded. Consumers can sign up for the service at Best Buy, Circuit City, Sears and Sound Advice or at www.moviebeam.com, with the receiver shipped directly to their homes.

MovieBeam's competitors fall into two main camps: Internet-based services, such as Movielink, which are targeted toward consumers with high-speed Internet connections; and cable-service-based products, which are only available in certain markets.

In both cases, the movies reside on servers outside the home.

With MovieBeam, the films are instead stored on the box's 160-gigabyte hard drive. To update the offerings, the company continually sends out small packets of data, piggybacking the information locally on top of WJCT TV-7's broadcast signal, said Brian Lietz, vice president of technology and operation for the television station. The MovieBeam receiver strips those high-speed data streams from the signal and reconstitutes them into a movie.

Disney's technology might make expanding easier, since the company neither has to buy a cable system nor woo the smaller market of high-end computer users. To some extent, MovieBeam is competing with other providers, said Greg Ireland, a senior analyst with information technology advisory firm IDC, but it's also reaching customers who aren't satisfied or don't have access to other options.

"I think this is a case of consumers want to consume content and want to consume from a variety of channels," Ireland said. "This is another channel opening up."

It will cost MovieBeam between $200,000 and $250,000 to enter new cities, Mehta said. Between the 10 ABC stations Disney owns and the company's partnerships with National Datacast Inc. -- which provides data distribution through more than 300 PBS stations -- MovieBeam could have access to about 80 percent of the nation.

The company expects to add additional markets next year.

As well as introducing new technology into the marketplace, Disney's entrance is also a big move for one of the country's biggest content providers, conjuring up comparisons to the music industry's shunning of digital offerings.

"Over the next 12 to 18 months, Disney and other media companies will be working on developing non-traditional delivery channels," said Lydia Loizides, a senior analyst with Jupiter Research, an international research organization. "This is a business where the value of the content is just as valuable as it is in music. They need to build a relationship with an entire generational of people who are digital, who expect to have content when they want it and how they want it. "

That's one reason for the new service, the company said. "The studios have always tried to put out movies in different windows, at different price points," Mehta said. "We fully expect that all the studios will continue to support new technologies to distribute contents."



About

This is a showcase of the work done by Timothy J. Gibbons during a journalism career now stretching back more than a decade.

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