Disney's Beaming New Venture

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Looking for yet another way to get movies into your home? Disney (NYSE: DIS) is here to help with its new MovieBeam on-demand movie rental service.

Rolling out today in Jacksonville, Fla., Salt Lake City, Utah, and Spokane, Wash., the service consists of a box with a hard drive and an antenna. It stores 100 movies at a time, with 10 new ones rotating in and out each week. Users don't even need a cable or satellite connection: The movies are unobtrusively beamed in over ordinary broadcast airwaves. All that's required is an electrical outlet and a phone line for billing purposes.

MovieBeam users will be charged a $6.99 per month "equipment service fee," plus $3.99 rental fees for new releases and $2.49 for older titles. Movies are available for viewing for 24 hours only. Disney is also experimenting with an "activation fee" of $29.99 in one of the test markets. There will be no late charges, however, and that's one of Disney's big marketing points.

In a world chock full of movie options -- traditional stores such as Blockbuster (NYSE: BBI), mailed-to-your-home services such as Motley Fool Stock Advisor pick Netflix (Nasdaq: NFLX), cable networks such as AOL Time Warner's (NYSE: AOL) HBO -- how does MovieBeam stack up?

Advantages:

• Ability to pause and stop movies
  
• Doesn't require cable or satellite connection
  
• No late fees
  
• No need to return DVDs or videotapes

Disadvantages:

• Yet another set top box near your TV
  
• Costs more than Netflix if you rent more than four movies per month
  
• No movies currently available from Viacom's (NYSE: VIA) Paramount Pictures studio
  

Disney spokesman Peter Murphy told The Wall Street Journal that MovieBeam will also be used to distribute other content, such as TV shows or music. The service "can be as big as a cable network from a profitability standpoint," he says, because it won't require a relatively high capital outlay for its planned national rollout next year.

Interested movie buffs will be able to see a demonstration and sign up for the service at various retail outlets, including Best Buy (NYSE: BBY), Circuit City (NYSE: CC), and Sears (NYSE: S).

Do you think MovieBeam will be a winner for Disney, or just an expensive flop? Post your opinion on our Disney discussion board.