MovieBeam Rises From The Dead. Again?

Davis Freeberg —  May 6, 2008

Just when you thought it was safe to salvage your Moviebeam box for spare parts, there’s new hope on the horizon that Moviebeam may once again be coming to a television screen near you. Like a zombie from a bad horror flick, Moviebeam continues to rise from the dead feasting on the rotted brains of media moguls and venture capitalists with each new incarnation.

According to the Daily Bankruptcy Review, Movie Gallery has asked for bankruptcy court approval to sell their VOD service to Dar Capital Limited at a $2.25 million price tag.

Movie Gallery pulled the plug on its-on-demand movie service, called MovieBeam, in December as part of its restructuring under Chapter 11 protection. Dar Capital Limited has agreed to buy MovieBeam, which had about 1,800 subscribers at the time it was shut down. The service required customers to purchase a television set-top box that allowed them to order films for between $1.99 and $4.99. Movie Gallery said in court papers filed Thursday that it began shopping the MovieBeam business soon after shuttering the service and that 14 parties showed an interest in the company. Dar Capital is picking up MovieBeam’s remaining assets, which include certain trademarks and intellectual property associated with the business.

While the resurrection of Moviebeam will be welcome news for the 1,800 customers who initially ponied up the dough for a box, the sale of the service represents another bitter defeat for Movie Gallery. Just last year, they paid $10 million for the service. Initially, they had hoped to use Moviebeam to strengthen their digital strategy, but when they couldn’t convince in store customers to invest in yet another set top box, they shuttered the money losing service and cut off the early adopters who had plunked down hard earned cash for the box.

If the courts do allow the sale to take place, I’m not convinced that Dar Capital will have much luck in performing CPR on this one. Moviebeam fatal flaw was that that it suffered from a lack of choice and I don’t see this being any less of an issue for Dar Capital. If consumers could get access to everything on demand, paying an upfront fee wouldn’t be as much of a big deal, but with a miniscule selection of movies, it’s hard to justify spending money on a box, especially when you still have to pay for the content.

Even at the heavily discounted price of $2.25 million, this still means that Dar Capital will be paying $1,250 per subscriber. At this cost, they may be better off subsidizing the cost of 2,000 boxes and starting their own service. Then again, it’s entirely possible that Dar Capital is more interested in the bandwidth agreements, then the actual customer base. Moviebeam delivers their movies by piggybacking on PBS’ bandwidth.

Last week, Sezmi launched their wunderbox with promises of a bandwidth delivery system that sounds eerily similar to the one that Moviebeam implemented. Given the amount of bandwidth that Sezmi will need to deliver on their high definition promises, it wouldn’t surprise me if Dar Capital flips Moviebeam’s bandwidth, instead of turning the service back on. It’s still too early to know what Dar Capital’s end game will actually be, but we should know more on May 8th when Movie Gallery is due back in court.

Davis Freeberg is a technology enthusiast living in the Bay Area. He enjoys writing about movies, music, and the impact that digital technology is having on traditional media. Read more at Davis Freeberg’s Digital Connection.

9 responses to MovieBeam Rises From The Dead. Again?

  1. Davis, you see what category I posted this under? It’s got to be an IP play… The brand has no name recognition and 1,800 customers isn’t much more than zero. And how many of those 1,800 “customers” were actively downloading movies? I hadn’t made a purchase in months when they shut down. (I shot a pretty funny video of me dropping the Moviebeam down the trash chute (I lived on the 15th floor), but never ran it because I felt guilty that I didn’t recycle the components.)

  2. hahah, post the video Dave, We want to see the Moviebeam crack into thousands of pieces!

  3. Alright, who forget to tell Dar Capital that PBSs NTSC bandwidth doesn’t exist 8 months from now?

  4. “…I shot a pretty funny video of me dropping the Moviebeam down the trash chute..”

    Oh come on! Please put that up on YouTube immediately! I will do some extra recycling to offset it! I love watching people destroy gear – “Smash my _______ “, “Will It Blend?”, etc.

  5. That would be a sweet video, for sure.

  6. You guys just want to see PETA, Greenpeace, whomever come after me! ;) Let me see if I still have it and if it really is funny.

  7. OK, here ya go! Not sure how funny it is and I’m probably a few pounds lighter than I was June 2007…

  8. Dave I think that you are right about the patents. Here is at least one application that they’ve got on file.

    Chris also brings up a good point about the bandwidth. If that’s disappearing, then there wouldn’t be any value there. If they did acquire MovieBeam just for the IP, then they may not turn it back on for former customers. It will be interesting to see how this plays out.

  9. I’d agree that MovieBeam has zero name recognition and I’m not sure how they’d get around to “restoring” or breathing new life into the brand. My only experience with MovieBeam is that Youtube video of that unit taking a ride down to the incinerator.

    As an owner of several Microsoft UltimateTV units (an early DirecTV DVR with WebTV/MSNTV) I know what it’s like to have a “dead” platform that very few know anything about. Radio Shacks around my area couldn’t sell these DVRs for $50 (in 2002/2003 DVRs could cost you around $200 or more) and they did/do provide services you CAN NOT get on “modern” DVRs from DirecTV. 30 second skip, PIP, and a simple/fast UI (MS actually did a good job here).

    So maybe if MovieBeam starts selling gear for $50 and creates a “grassroots” base… They could have a cult following but I doubt it will be much of a hit until people recognize the name.