New technologies let Disney offer options for watching movies at home

Tuesday, May 20th 2003, 12:00 am

By: News On 6

LOS ANGELES (AP) _ The Walt Disney Co. will test two technologies this fall _ movie downloads and self-destructing DVDs _ designed to broaden the distribution of its films and boost profits by cutting out the middleman.

The first service, called ``MovieBeam,'' will beam films to consumers to boxes atop their TVs.

Disney will launch it in Salt Lake City and two other markets yet to be announced. Viewers will need to rent set-top boxes available at consumer electronics stores that plug into a television like a DVD player.

Pricing of movies will be similar to a rental at a video store. Viewers will be able to watch a rented film as many times as they wish in a 24-hour period.

MovieBeam intends to offer another alternative for movie fans who can now get video-on-demand from cable companies or via Internet through such services as Movielink.

In August, Disney will also begin selling self-destructing DVDs that will allow viewers to buy a movie for slightly more than a video rental. Once the package is opened, the DVD can be played for 48 hours, after which a chemical is released that renders the disc useless.

Both systems, Disney says, are designed to eliminate the inconvenience of visiting a video rental store, such as Blockbuster, to rent and return movies.

Blockbuster may not be too worried about MovieBeam because it is making an increasing amount of money on DVD sales _ and MovieBeam does not plan to make films available until after they have debuted in video stores.

With the rising popularity of DVDs, movie studios are more interested in keeping a bigger slice of the pie. In Disney's most recent fiscal quarter, revenue from worldwide home video sales contributed the only bright spot as profits from its theme parks, television networks and consumer products divisions all lagged.

``Unlike cable video-on-demand, where the customer gets VOD from his or her cable operator and the studios get paid a wholesale fee, this is a direct-to-consumer retail service where the consumer builds a relationship with us,'' Peter Murphy, Disney's chief strategic officer, said of MovieBeam.

Video-on-demand also allows consumers to watch movies any time of the day and fast forward, rewind or pause just like a video.

With so many households already wired with cable or satellite boxes, VCRs and DVD players, Disney could have a tough time convincing consumers to try its new service.

``It's very hard to see how consumers will make room for that alongside what they've already got,'' said Josh Bernoff, an analyst at Forrester Research.

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