Washington, D.C. (December 19, 2007) -- MovieBeam, the VOD set-top service once backed by Disney, has gone out of business.

The Associated Press reports that MovieBeam, which is now owned by video retailer Movie Gallery, generated just 1,800 subscribers in four years.

The MovieBeam set-top, which was available at retail and online, delivered standard-def and HDTV movies to the home using a PBS datacast space. The movies were available for small rental fees under $5.

Disney expressed hope at launch that MovieBeam would bypass the cable and satellite operators and provide programming directly to the consumer.

However, despite much hype at launch, the service never took off with consumers seemingly unwilling to bring another TV-based set-top into the home.

Commentary:

MovieBeam's failure should be a lesson for any company trying to sell a TV-based set-top at retail. Americans have set-top fatigue -- and they are tired of stacking set-top upon set-top next to their televisions. In many homes, they already have a cable/satellite box, a DVD player, a VCR, a video game player and perhaps even an A/V receiver. Enough is enough.

This is why MovieBeam failed. It's why TiVo is struggling to generate subscribers outside of cable/satellite partnerships. And it could be a reason why the high-def DVD players are lagging in sales.

For a new set-top to succeed, it has to offer a service so powerful that Americans will ignore their set-top fatigue and give it a try. MovieBeam clearly was not that service.

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Swanni (Phillip Swann) is president and publisher of TVPredictions.com. He has been quoted in dozens of publications and broadcast outlets, including CNN, Fox News, Inside Edition, The New York Times, The Washington Post, The Chicago Tribune, The Financial Times, The Associated Press and The Hollywood Reporter. He can be reached at swann@tvpredictions.com or at 703-505-3064.

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