Disney experiment files for bankruptcy

MovieBeam, an experiment in video-on-demand launched by The Walt Disney Co., has shut down as part of its new parent company’s reorganization under Chapter 11 of the bankruptcy code.

The 4-year-old service, which transmitted movies over the air for storage on a set-top box that was like a hard drive, ceased operations Dec. 15, said Meaghan Repko, a spokeswoman for Dothan, Ala.-based Movie Gallery.

The service was operating in more than 30 metro areas nationwide, according to its Web site.

“The decision to discontinue the service was made in light of our ongoing efforts to enhance our financial performance,” Repko said Tuesday.

The nation’s No. 2 video rental chain, Movie Gallery, acquired MovieBeam in March, intending to use its technology to foray into delivering movies and other content online.

Movie Gallery filed for bankruptcy in October after months of struggling with debt.

MovieBeam had 30 employees and 1,800 subscribers when it shut down, Repko said. She said subscribers who joined the service in March or later were being refunded the cost of the set-top box, which came loaded with 100 films, including extras such as directors’ commentaries, and could show them in high definition.

Disney began testing MovieBeam in 2003 and expanded its rollout last year with other financial backers, including Cisco Systems Inc. and Intel Corp. Disney, however, remained the service’s largest investor.

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