MEMORY LANE: Beam me down
The path to permanence is
Fashioning clever ways to make movies appear on television screens without the intervention of a traditional distributor (read: a cable company) has been a quest of Hollywood for a long time. In the modern Internet era, especially, studios are understandably taken by the siren song of disintermediation, or the chance to form direct relationships with fans and buyers by making films available online through convenient, accessible, and presumably higher-margin platforms than legacy pay-per-view offerings or newer video-on-demand services.
The latest wrinkle involves doing away with the personal computer as a necessary in-between device for capturing and shuttling movies to the living room. Among new examples is the in-the-works partnership between Netflix Inc. and LG Electronics that will make use of a yet-to-be-introduced in-home receiver. Also up to bat is Apple Inc.’s new-and-improved Apple TV system, which similarly delivers movies to the TV without the participation of a PC. Whether either avoids the fate of other entrants like Akimbo Systems, which recently stopped making and selling Web-to-TV interface boxes, is uncertain.
What history does seem to want to tell us, though, is that the idea of cobbling together a movie-delivery system that depends on outside-of-the-mainstream transmission paths is full of risk. That’s a lesson learned recently by the venture capital firms that backed Moviebeam, the failed movie datacasting service that called it quits late last year. Launched by Walt Disney Co. in 2004, reconstituted as an independent company in 2006 and sold to Movie Gallery Inc. last year, Moviebeam gobbled up more than $50 million from Mayfield Fund, Norwest Venture Partners, Cisco Systems Inc. and Intel Corp. before halting operations.
Moviebeam used a proprietary receiver and an associated digital-rights management scheme to let customers watch commercial-free movies at their whim. The $199 box came pre-loaded with 100 titles, and users could rent additional titles for about $3 each. The video streams poured into the home over the airwaves, using fallow analog spectrum from Public Broadcasting System affiliates in about 30 markets.
What went wrong? Moviebeam customers who have posted RIP notices on the Web site Endgadget.com quibbled about lack of title breadth, disdain for Moviebeam’s proprietary DRM approach, insufficient high-definition movies and even “weird shaped boxes.” But one big impediment seemed to be the delivery approach itself. In relying on spare over-the-air spectrum, Moviebeam consigned itself to an inefficient distribution avenue that demanded negotiation of market-by-market deals with television broadcasters. This, in an era where more than 60 million U.S. homes all over the place already have access to high-bandwidth conduits of broadband Internet connections.
On somebody’s business plan somewhere, conceiving of an over-the-air delivery scheme probably seemed like a good idea. And it’s true that in sending secured movie files over the airwaves, Moviebeam had conjured an inexpensive alternative to monthly high-speed Internet connection fees and to cable VOD offerings that typically require buy-through of underlying service tiers. “I’m so sad,” wrote one Endgadget contributor of Moviebeam’s failure. “My wife and I absolutely loved this service. We do not have cable or satellite (over-the-air only), and we only watch movies. So this service was perfect for us.”
Still, achieving enough scale to make a go of it proved difficult, especially considering that Moviebeam – like Apple TV and like the forthcoming Netflix service – asked consumers to do something they have historically been reluctant to do, which is add another set-top box to the list. The television landscape is littered with the corpses of shuttered ventures that shared the same foible. As digital video recorder pioneers TiVo Inc. and Replay Networks learned, the path to permanence is to integrate functionality into incumbent boxes, not to presume users will faithfully stack more hardware near the coffee table.
Even then, success is hardly predictable. Twenty years ago, the new-media arm of ABC tried to do something very similar to what Moviebeam attempted.
Working with local TV stations in a few markets, ABC Video Enterprises rigged up a system to beam pay-per-view movies during the wee hours of the night to special adapters that triggered videocassette recorders to tape the broadcasts. I can’t for the life of me remember the name of the service. But I do remember the post-mortems that followed, critiquing the effort for its dependence on a proprietary receiver and its reliance on over-the-air delivery. As Moviebeam seemed to illustrate recently, maybe things haven’t changed all that much since then.