April 28, 2005 12:24 PM PDT

Disney video-on-demand service halted

Disney's MovieBeam video-on-demand service has temporarily been put on hold while the company seeks to upgrade the system and potentially find new corporate partners.

MovieBeam has been operating on a trial basis in just three cities around the United States, using the television airwaves to send movies to subscribers' hard drives. The movies can then be played for a small fee.

A Disney spokeswoman said Thursday that the service in Jacksonville, Fla.; Spokane, Wash.; and Salt Lake City had been temporarily interrupted while the upgrades were taking place. The company can't yet predict when service will be restored or when the upgrades will take place, she said.

"In order to provide our consumers with even better entertainment experiences, MovieBeam is planning an upgrade of its technology, network and infrastructure," the company said in a statement. "We are having discussions regarding platform and rollout strategy with several potential partners and upon successful completion of those conversations will introduce the next phase of the service."

The company has been exploring new directions for several months, and last fall canceled plans to expand to new markets.

InStat/MDR analyst Gerry Kaufold said he believes Disney views the service as generally successful, and that the participation of other major movie studios means they too see potential. However, the technological details can be improved, he said.

"They had it up and running, showing that it works," Kaufold said. "But there is a much larger, broader opportunity than the specific MovieBeam service they trialed in those three cites."

The original MovieBeam was based on "datacasting" technology provided by a company called Dotcast. Customers would rent a receiver for $8.99 a month that would be periodically refilled with 100 movies that could be watched anytime. The data streams were trickled to the devices over time using unused bits of television airwaves.

 

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