by Mike Masnick

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?

Reader Comments (rss)

(Flattened / Threaded)

  1. identicon
    Anonymous Coward, Feb 14th, 2006 @ 1:35pm

    No Subject Given

    Integrate with software that is already playing back television and skip the set-top box. If this service worked with Windows Media Center, Sage or MythTV, I would cancel my Netflix membership.

    reply to this | link to this | view in thread ]

  2. identicon
    jcyr, Feb 14th, 2006 @ 1:48pm

    Re: No Subject Given

    I agree with the poster above about an online component. Maybe the market isn't yet large enough? Still, with Vongo and others, it is hard to imagine paying for a movie per download now. Even more difficult for me to imagine buying a set top box, let alone having it clutter up my house.

    reply to this | link to this | view in thread ]

  3. identicon
    Adam, Feb 14th, 2006 @ 1:50pm

    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.

    reply to this | link to this | view in thread ]

  4. identicon
    obvious, Feb 14th, 2006 @ 1:52pm

    subsidizing won't work

    You can't subsidize a set-top box with a HDD - everyone and his aunt will get one just to extract the hard drive.

    reply to this | link to this | view in thread ]

  5. identicon
    Kit Triforce, Feb 14th, 2006 @ 2:17pm

    Re: subsidizing won't work

    Dish Network newer DVR's contain just that, an extra hard drive that stores on-demand pay-per-veiw movies that apparently can be ripped with a streamripping utility. I'm surprised their move hasn't generated more publicity.

    reply to this | link to this | view in thread ]

  6. identicon
    Jamie, Feb 14th, 2006 @ 2:45pm

    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.

    reply to this | link to this | view in thread ]

  7. icon
    Mike (profile), Feb 14th, 2006 @ 2:47pm

    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.

    reply to this | link to this | view in thread ]

  8. identicon
    Jim, Feb 14th, 2006 @ 3:07pm

    Re: Better business model ideas without all the in

    When the service is an unknown, consumers DO care about risking $200, especially when the competing services are already paid for (TiVo, cable, sattellite) or have no up-front fees (NetFlix, BlockBuster, etc.)

    reply to this | link to this | view in thread ]

  9. identicon
    Adam, Feb 15th, 2006 @ 6:14am

    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.

    reply to this | link to this | view in thread ]

  10. identicon
    Texan, Feb 21st, 2006 @ 7:08am

    Not worth it

    I already have a large selection of MOD with my current digital cable service. The prices are the same as at video stores and the selection is decent. I'm not going to spend $200-300 for a service I already have. In fact, even if they gave me a free box, I don't see how I gain any additional value.

    reply to this | link to this | view in thread ]

  11. identicon
    danno, Mar 10th, 2006 @ 9:09am

    Re: No Subject Given

    i used to work as a product tester for MovieBeam, and i heard that broadband connectivity and a usb antenna were comin' down the pipeline... so maybe just maybe we have ourselves a netflix killer. and jeez... no @!#$ scratched discs!!!

    reply to this | link to this | view in thread ]

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