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Summary:

A little more than a year ago we were writing about the spinoff and recapitalization of on- demand movie service MovieBeam backed with $52.5…

A little more than a year ago we were writing about the spinoff and recapitalization of on- demand movie service MovieBeam backed with $52.5 million in funding. Today, video rental chain Movie Gallery announced that it had acquired MovieBeam Inc. and would spend less than $10 million on the service in 2007 — including the acquisition costs and development expenses. In exchange, Movie Gallery gets the digital platform it needs to compete with Blockbuster, Netflix, Wal-Mart, Amazon and other video rental options.
It’s a tad anticlimatic for a company that started several years ago as a major Disney project that cost some $70 million before going cold in early 2005 when Disney switched to a shutter-and-sell strategy. Moviebeam emerged again in February 2006 as a separate company touting a subscription service that ran $230 a year. The service is available in 31 cities and required the set-top box co-branded with Cisco’s Linksys, an investor in the spinoff. MovieBeam needed to sell 500,000 boxes and subscriptions to break even, an exec said at the time. Release.
Investors in the spinoff included Mayfield, Norwest Venture Partners, Intel Capital, Cisco, Vantage Point Venture Partners and Disney’s ABC.
Without being privvy to the exact details, this bears the marks of a fire sale — a company with more than $120 million behind it all said going for less than $10 million. Will it wind up being worth even that to Movie Gallery?
Related:
— Unsolicited Advice To Moviebeam: Get Rid Of The Box
— <a href="http://www.paidcontent.org/mossberg-moviebeam-smart-solution-for-some-users&quot; title="Mossberg: MovieBeam

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  1. whoindatgarden Thursday, March 8, 2007

    What amazes me is that such companies got funded and not just funded but a whopping $70 million.
    I try and do the math and I seem to come up short every time with regards to how the money was spent.
    Is this a joke or what I wonder where if any there is a Fiduciary responsibility in the part of companies like Disney.
    Moviebeam can't deliver as it has a bad service, whether or not you give the equipment for free or not, the service is just bad and the Business Problem it supposedly tries to solve is not solved.
    Video on Demand has not brought in stellar revenues for Cable companies, Moviebeam is VOD just through the airwaves and the VC firms that invested seem to have either nothing more than a network of connections to have made this bet or lack any insight into the business concept as laid out by Moviebeam.

    Wonder how the technology platform gives this new venture an edge on Netflix/Blockbuster and a plethora of Online Download sites.
    Guess with so few ideas to truly solve the business problem at hand there is tons of money to invest and those investing have taken care of themselves and the next 5 generations to be able to gamble.

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