HD Disk formats are dead, long live HD Movies


First run standard format videos rent for $3.99 and high-definition
videos rent for $4.99. Older movies in the catalog cost $1.99 for
standard format and $2.99 to rent high-definition format movies.

"If you're somebody who rents an awful lot of movies, this is
potentially attractive," Forrester Research analyst Josh Bernoff said.

"But, for the great mass of the movie-viewing public, getting a separate
set-top box just to get movies is an awfully big stretch," he said.

JUMPSTARTING U.S. ONLINE MOVIE DELIVERY

Despite frequent obituaries for the video store industry, seven out of
ten movies are still rented at retail outlets. An estimated 85 percent
of rentals are for first-run videos -- the 50 or 60 latest releases
prominently featured in stores.

It's this piece of the video market MovieBeam targets.

MovieBeam offers consumers the ability to rent separate movies. By
contrast, Netflix Inc. offers DVD rentals for a monthly subscription fee
from a library of 30,000 films.

Late last year, Netflix Chief Executive Reed Hastings said the online
DVD rental company had postponed the launch of its own movie download
service, which was to have debuted in 2005 because of problems acquiring
content.

Hastings said in October that Netflix was working to develop technology
to deliver online movies so the service can be ready to launch "when the
content climate begins to thaw."

Media companies had resisted allowing widespread online downloading of
first-run movies for fear of cannibalizing the huge profits they make on
DVD sales and of losing DVD sales to piracy.

Wedbush Morgan analyst Michael Pachter said on Monday that there is also
a question of whether U.S. broadband penetration is sufficient to make
online downloading a significant revenue generator for the studios.

"You can't rent high-definition films today," said investor Matthew
Howard of Norwest Venture Partners, a co-investor with Mayfield Fund and
VantagePoint Venture Partners. "The beauty is that everyone else has to
work out network access in order to offer anything similar," he said of
potential online rivals.

(Additional reporting by Eric Auchard in San Francisco)




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