Disney, who briefly tested their VOD service MovieBeam two years ago, is now giving the service a major launch with the help of some big investors, namely, Intel and Cisco. Disney is optimistic about the endeavor, but there are a few price points that may prevent the service from catching on in a big way.
First, the up front price of the box (after rebate and activation fee) is $230. That’s a lot of money for another box that sits on top of your TV.
Second, even after paying the up front price, there is a fee for every download. $3.99 for new releases, $1.99 for older titles. Add $1 for hi-def.
Third, at any given moment there are 100 movies to choose from (c.f. Netflix 50,000).
Fourth, Comcast Digital Cable offers an OnDemand service for free with many more titles (both films and TV programs) most of which are free to view.
On the bright side, the 100 movies are rotated on a weekly basis, 10 new films added while others are taken off. The real selling point is that the movies are new releases like you’d find at a local Blockbuster (or inside a Redbox Kiosk) without having to leave the comfort of your home. Execs say that most people do not have digital cable, and the endeavor would break even if only 500,000 people signed up for the service. The boxes themselves are being sold at a slight loss.
Most of the rental fee is paid to the content providers (studios), so I wouldn’t be surprised if the service strongly favored Disney releases. Incidentally, analysts say that it costs the company 70-80 cents for each transmission.