What little remained of down-and-out video-on-demand pioneer Diva Systems Corp. will live on in the VOD system portfolio of Movidis Inc.

Movidis has coupled the VOD business management software it acquired from the bankrupt company with its own Molecular Media Server, creating an "end-to-end" system that will drop per-stream costs to about $89, company officials said.

"We want to disrupt the stream prices in this market," said Keith Beckwith, Movidis' vice president of product management and marketing, noting that cable operators will demand lower and lower per-stream costs as they begin to widen their libraries of on-demand content.

Those lower costs, he added, will also make the Movidis VOD system attractive to small- and medium-sized MSOs. Movidis' "entry-level" system, complete with the backoffice software and enough hardware for 40 MPEG-2 streams and 100 hours of storage, goes for $14,990. Entry-level systems from other vendors can be four to 10 times that figure, Beckwith claimed.

Beckwith said his company has recently completed some alpha and beta tests and is in lab trials with undisclosed MSOs. "We anticipate true revenue streams in the first quarter of 2004," he added.

Movidis' first software release is designed for cable systems based on Motorola Broadband technology, said Movidis vice president of engineering James Armstrong, a former Diva executive. "Although we've been qualified for [Scientific-Atlanta], our first release isn't for that," he said.

Movidis' server, which uses off-the-shelf IBM hardware, supports up to 400 simultaneous MPEG-2 streams per 3-RU chassis. The software piece includes elements such as content and subscriber management, promotion/commerce engines, billing interfaces and session management.

Diva was already moving toward a VOD model that fused its software engines with commodity server hardware when it filed for bankruptcy in May 2002. Gemstar-TV Guide International, as part of a pre-packaged deal, initially stepped in to buy Diva's intellectual property and assets for $40 million, but later scuttled the agreement. Before going under, Diva had deployments with AT&T Broadband (now part of Comcast Corp.), Insight Communications and Charter Communications.

Movidis wouldn't disclose how much it paid for Diva's software, but the company paid "substantially less than it cost to write," Beckwith said.

Movidis marks the latest VOD vendor to come to market with a hardware-software combination, a strategy that's been in been in use for several years by the sector's "Big Three"— Concurrent Computer Corp., nCUBE Corp. and Seachange International. Movidis also has a relationship with VOD backoffice/integration house N2 Broadband.

If some recent agreements provide any indication, startup "next-gen" VOD server vendors are putting more and more weight on the software side of the business. MidStream Technologies, one of several server vendors to enter the market in recent years, has already teamed with N2, and, earlier this year, struck a deal to license nCUBE's "nABLE" backoffice VOD platform.