Disney has released a set top box that holds about 100 movies, designed to compete with Blockbuster and other video rental stores. The service, called MovieBeam, doesn’t use satellite or cable to transmit the movies. Instead, it comes with about 100 movies preinstalled at a cost of $6.99 per month with movie rentals between $2.49 and $3.99. There’s no equipment to purchase with this service — the monthly charge presumably covers it (some areas require a setup fee).

The movies themselves are transmitted from a local TV station, using up any extra bandwidth. So this is clearly not “video on demand”, especially since the movies could take a while to download. But Disney does envision that this will compete successfully with video stores.

I’m less optimistic than they are in this regard. It seems to me that the primary competition won’t be video stores but pay per view and Netflix. Netflix charges $20 per month. You can consume as many DVDs as you want, but only 3 at a time. Assuming you did pretty well and watched 3 DVDs a week (does anyone really have that much time?), MovieBeam would cost you more than NetFlix. In addition, MovieBeam only lets you watch a movie for a 24 hour period, which is kind of lame compared to the video stores.

MovieBeam would be better if you could select a certain number of videos per month for a fixed subscription price. After that, you’d have to pay extra or wait until next month. That would match up better with Netflix and be more convenient to boot. Another alternative would be a check-in/check-out policy where you could select three videos, for a minimum time period of 24 or 48 hours. That would closely match Netflix, where the rate of video rentals is held back by the fact that they have to mail you the DVDs. If you selected a MovieBeam video and couldn’t select another for two days, it’d have roughly the same effect in terms of limiting, but would allow you to watch the video for longer if you wanted to.