A little more than a year ago we were writing about the spinoff and recapitalization of on- demand movie service MovieBeam backed with $52.5 million in funding. Today, video rental chain Movie Gallery announced that it had acquired MovieBeam Inc. and would spend less than $10 million on the service in 2007—including the acquisition costs and development expenses. In exchange, Movie Gallery gets the digital platform it needs to compete with Blockbuster, Netflix, Wal-Mart, Amazon and other video rental options.
It’s a tad anticlimatic for a company that started several years ago as a major Disney project that cost some $70 million before going cold in early 2005 when Disney switched to a shutter-and-sell strategy. Moviebeam emerged again in February 2006 as a separate company touting a subscription service that ran $230 a year. The service is available in 31 cities and required the set-top box co-branded with Cisco’s Linksys, an investor in the spinoff. MovieBeam needed to sell 500,000 boxes and subscriptions to break even, an exec said at the time. Release.
Investors in the spinoff included Mayfield, Norwest Venture Partners, Intel Capital, Cisco, Vantage Point Venture Partners and Disney’s ABC.
Without being privvy to the exact details, this bears the marks of a fire sale—a company with more than $120 million behind it all said going for less than $10 million. Will it wind up being worth even that to Movie Gallery?
Related:
—Unsolicited Advice To Moviebeam: Get Rid Of The Box
—Mossberg: MovieBeam “Smart Solution” For Some Users
—Moviebeam Drops Box Prices in Promo
—More On MovieBeam Relaunch
—Moviebeam Recapitalized; Gets $52.5 Million in Funding; Spun Off From Disney