Buoyed by its success selling ABC television shows online, Walt Disney Co. plans to revive an experimental service today that beams movies into customers' homes.
MovieBeam was designed as the couch potato's alternative to driving to the video store, but the service was suspended in April after a two-year trial that proved that the technology worked and that people would pay for the convenience.
Disney and its partners -- Cisco Systems Inc. and chip maker Intel Corp. -- are relaunching MovieBeam as the market for downloadable video is picking up. Disney was among the first companies to sell shows through Apple Computer Inc.'s iTunes Music Store.
But, analysts said, MovieBeam is anything but a sure bet.
The service allows customers to rent movies from a library of 100 titles stored in a set-top box. As many as 10 new films, including some in high definition, are automatically delivered to the device each week via television airwaves. The MovieBeam box costs $199.99 after a $50 rebate and requires a one-time service activation fee of $30. Movie rental fees are $3.99 for new releases -- $4.99 for films in high definition -- and $1.99 for older titles.
MovieBeam faces significant competition in the $9.5-billion movie rental market -- not just from the neighborhood video store but from cable operators that already offer video-on-demand services and Internet movie rental companies such as Netflix, which deliver DVDs by mail for a flat monthly fee of as low as $9.99.
"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."
It's the same barrier that stifled growth of another technological innovator, TiVo Inc., whose digital video recorder simplified the process of recording television shows.
Disney introduced MovieBeam in 2003 in three small cities -- Jacksonville, Fla., Spokane, Wash., and Salt Lake City -- in a bid to create a direct film pipeline to customers. It pulled the plug in April, saying it would reevaluate the service and its financing.
The studio wrote down $56 million of its investment and spun off MovieBeam as a separate company, which it jointly owns with Cisco and Intel. It raised $48.5 million, including investments from venture capital firms, to bankroll the service's introduction in 29 cities -- including Los Angeles, New York and Chicago.
