Disney Launches Set-top Movie Rentals

[TexasStooge]

LOS ANGELES (Reuters) - Walt Disney Co. (NYSE:DIS) on Monday launched a home movie service in three test markets called MovieBeam that stores films in a set-top box and updates itself automatically via television broadcast airwaves.

The MovieBeam project, which will offer films for all but one major Hollywood studio, marks Disney's second attempt in recent weeks to break into home film distribution.

The Burbank, California-based company recently began offering disposable DVDs from its Buena Vista home video unit through retail stores, and it has also signed up with online download services CinemaNow and Movielink.

"Every time we offer additional services to consumers, it only really grows the pie for the movie studios," said Disney Executive Vice President Salil Mehta, who develops new technologies for Disney.

The MovieBeam set-top box, which is being manufactured by Samsung Electronics Co. Ltd. (05930.KS), is similar in size to a DVD player and holds 100 movies on a 160-gigabyte hard drive, like TiVo and other brands of personal video recorders, the company said. Disney will send new movies, about 10 per week, to a digital receiver on the set-top box.

In a deal with public television stations, Disney is embedding a digital stream in traditional television signals, it said.

The service will launch first in Jacksonville, Florida; Salt Lake City, Utah; and Spokane, Washington, Disney said.

Disney could make money quickly on MovieBeam, since it can set up a metropolitan delivery system that adds a tiny digital stream of data to a traditional television station's signal for $250,000 or less, Mehta said.

MovieBeam requires a $6.99 monthly subscription fee, which covers the use of the box, while individual movie "rentals" on the service cost $3.99 for a new release and $2.49 for an older film. Movies can be watched for 24 hours.

The set-top box stores 100 movies and swaps out about 10 of those each week. MovieBeam gets the films at the same time as the pay-per-view cable television window, which is after video stores get the newest releases.

Chains like Blockbuster trumpet the release of videos and DVDs with a guarantee that consumers can rent a new release as soon as it hits shelves, but Mehta said Disney's research indicated that the release lag would not hurt MovieBeam.

"For the most part people don't seem to flock to the store on the first day of release," he said. Like disposable DVDs, MovieBeam promises the convenience of never having to return rented movies or pay late fees.

Some 30 million households rent at least four movies per month, he said.