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Summary:

Well that didn’t work. On-demand movie company MovieBeam, a much-toiled-over Disney spinoff, has been bought by Movie Gallery for less than $10 million. With burnout speed of bubble proportions, MovieBeam had just one year ago relaunched with $48.5 million in recapitalization from major backers after a […]

Well that didn’t work. On-demand movie company MovieBeam, a much-toiled-over Disney spinoff, has been bought by Movie Gallery for less than $10 million. With burnout speed of bubble proportions, MovieBeam had just one year ago relaunched with $48.5 million in recapitalization from major backers after a reported $70 million spent on the project at Disney.

MovieBeam’s pricing was utterly uncompelling — $250 for hardware plus $30 for activation, then $3.99 for new-release titles, $1.99 for older titles, and $1 more for HD (though some of this was lowered in promotions).

Movie Gallery, whose stock is up $0.24 to $4.79, said it would use the purchase to develop its own digital delivery service.

MovieBeam’s investors, who have assuredly lost money on the deal, had included The Walt Disney Company, Cisco Sytems, Intel Capital, Mayfield Fund, Norwest Venture Partners, and VantagePoint Venture Partners.

Last week we wrote about another troubled VOD startup close to getting bought for its technology — Movielink, by Blockbuster.

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