Trying Again: MovieBeam's Marginal Improvements

from the a-step-in-the-right-direction? dept

Last week we made fun of Cisco and others for dumping $50 million into MovieBeam, Disney’s failed movie-on-demand effort that would offer a bunch of movies on a set-top box, with the selection of movies rotating quietly in the background each week. The company (freshly separated from Disney, but still mostly owned by Disney) came out today with the details of its new offering — and it’s clear they’ve made some changes — but not necessarily enough to matter. First, they got rid of the monthly subscription fee. That makes sense. Second, they’ve done deals with movie studios so they can offer movies the same day the DVDs get released. That could be a selling point for those who like to watch new releases, but don’t like going to the video store. However, there are still quite a few hurdles. The $200 limited-use box, for example, is a big one. The $30 activation fee, and the per-movie fees that offer no benefit over rental prices also don’t help. Also the whole “yet another set top box thing” is still an issue. If the company really wanted to push adoption, it should have taken the suggestion we made to TiVo years ago. Subsidize the boxes almost completely. Basically, give away the boxes. Take a loss on them, but once they’re out there, people will be a lot more willing to try out and use the service. The real revenue opportunity here is in the service fees anyway. Why set up $230 hurdles to get people to try out the service? Maybe have a small fee to get actual buy-in, but otherwise, they’ve shrunk the market for their service considerably by worrying about the upfront costs. Yes, it would require a lot of money upfront, but the upside could be much higher. After all, this is really just a regular video-on-demand offering where the storage is local. Why price it so much higher than if the storage were remote?

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Comments on “Trying Again: MovieBeam's Marginal Improvements”

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Adam says:

Better business model ideas without all the inform

I wouldn’t be surprised if the $200 price of the box is already a reduced cost for consumers. Think of the methodology used by game console creators like Nintendo. They sell their consoles at a loss, and make up for it with revenue gained by the game sales. Though MovieBeam may not be giving the box away, it is possible it could already be giving the box at a dramatic price reduction.

If the original cost to produce is $400, then $200 becomes a good deal. Making the concept of ‘free’ a bit too overly ambitious, atleast for my own business sense saftey zone. But then, the market is all about risks sometimes. We really gotta start giving these companys a bit more benifit of the doubt. Unless we know exactly the intent and ideas on the minds of the people running these companys, we can only do so much speculation on viable distribution options. After all, they have full time paided employees who understand alot more of their business and plans than we do.

Anything else like assuming giving the box away for free would be a better option is almost premature without full knowledge of the entire marketing, company/manufacturer deals and restrictions to maintain those deals, distribution costs as well as legal and patent costs and etc, etc. Otherwise, yes giving away access to the service does make logical sense in the first thought, but more research into the full business application and inner workings of the company would be needed to fully quantify the viability of that option.

Jamie says:

Re: Better business model ideas without all the in

You are right. Without knowing the business details, we can’t know what the company is even able to do. much less what it should do. Free might not be a viable option for the company. But that doesn’t change the main point of the article. Consumers have no good reason to purchase the device as long as the device doesn’t offer any real value over movie rentals. The way it is being offered now it is most likely to fail.

Mike (profile) says:

Re: Better business model ideas without all the in

I wouldn’t be surprised if the $200 price of the box is already a reduced cost for consumers.

Oh, I’m positive that the $200 is subsidized already.

That doesn’t matter.

What matters is getting consumers to use the service, and you don’t do that with a huge hurdle, even if it is below cost. The customers don’t care about the cost of the box. They care about the value of the service.

Adam says:

stupid idea

With the two-day turnaround, netflix is effectively video on demand. Why would I pay $200 for something that gives me a choice of only a few movies in any given week, as opposed to tens of thousands?

The other joy of netflix is the so-called “long tail”, catching up on classics or cult films or foreign things. I can’t imagine this set-top box will have a deep selection.

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