Disney Debuts MovieBeam Service

While DVD has replaced VHS as the standard for video, media companies have
shied away from competing with video store franchises, which distribute
their product. But Disney, with the launch of its new MovieBeam service is
getting into the business of electronic movie distribution.

Walt Disney Co. said it has launched MovieBeam, what the company calls an “on-demand movie rental service.” The service combines a number of technologies, which the company says have been tested and are fully secure.

“We are using smart card security layered on top of multiple levels of
security that prevent the duplication of illegal copies,” said Tres Izzard,
senior vice president and general manager, Buena Vista Datacasting, the
Disney division running the new MovieBeam service.

The diversified entertainment-media company said MovieBeam is being made
available starting this week in Jacksonville, Fla., Spokane, Wash., and Salt Lake City.
The company has plans for a national rollout in 2004, and will announce
which specific markets the MovieBeam service will become available in the
new year.

Disney will charge customers $6.99 per month for an equipment service fee
for access to the MovieBeam set-top box, which is being manufactured by
Samsung.

Izzard there aren’t plans to build a more sophisticated set-top box, and
said that service, content and communication upgrades will be sent directly
to customer homes via its electronic network.

“We are able to broadcast out software updates,” Izzard said, adding Disney
has contractual arrangements with PBS National Datacast and Dotcast to feed
the movies in compressed data formats over a national datacasting network to
MovieBeam receivers in customers homes.

In addition, to charging customers more than $80 per year for the MovieBeam
set-top boxes, Disney will charge $3.99 for viewing new movie releases, and
$2.49 for older titles. Customers are able to watch the movies as many times
as they want for a 24-hour period.

Disney said that 100 different titles will be available at a time, with ten
new titles accessible through the set-top box per week. With the new
service, Disney is aiming to compete with not only video stores nationwide,
but cable and satellite operators offering similar movies-on-demand
services.

Disney was successful in lining up the major Hollywood studios to be part of
its MovieBeam venture. However, Paramount, which is part of Viacom
, the owner of both Blockbuster and a partner in the MovieLink movie-downloading service, has yet to commit to Disney’s new video rental system.

“We are in ongoing discussions with them,” Izzard said.

The major movie release companies participating in Disney’s MovieBeam service include DreamWorks, MGM, Miramax, New Line Cinemas, Sony Pictures, Universal Studios, Warner Bros., 20th Center Fox and of course Walt Disney Studios.

Disney said its new releases for the week of September 29 include “Lord of
the Rings: The Two Towers,” “Chicago,” “Old School” and “Die Another Day.”

Disney said the Movie Beam receiver is a “device automatically receives,
movies, stores them on its hard-drive, and gives consumers the opportunity
to view them.”

Disney said the movies are “transmitted via a digital wireless signal to the
MovieBeam receiver’s small indoor antenna, replacing 10 titles. The data
transmissions take the form of secure data streams and are sent through the
broadcast spectrum of television stations owned by ABC and National
Datacast’s network of PBS stations.”

Izzard said Disney has lined up relationships with several national
retailers, where customers will be able to sign-up for the service, along
with an agreement, which will lease them the MovieBeam receiver. The
retailers Disney is working with include Best Buy ,
Circuit City and several other national audio-video
retailers.

In addition to the charges for the set-top equipment and the movie viewing,
Disney also said there “will also be a one-time activation fee of $29.99
required in some areas.”

Disney said customers who sign up for the service through retailers or
directly online will get the MovieBeam receiver, remote control and small
antenna via FedEx within two days.

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