Can Movie Gallery Save MovieBeam?

Almost a year ago I wrote a review of MovieBeam, wherein I described it as a good, but pricey product.  Since then, a few promos to get the box for $49-149 were offered.  Endcaps at Best Buys were installed.  A few other influential people tried it out.  But it doesn’t seem like much has helped get their sales going. 

When I was first sent a unit, I was told Ethernet support would come by the Summer (of 2006).  It didn’t.  Furthermore, the movie selection over the past few months has mirrored what I typically see on United flights: a few good movies I missed in the theaters supplemented with a list of things I would never watch (although I did get a full 23 minutes into Snakes on a Plane before shutting it down).  This combined with a fairly non-competitive price point was a bit of a circle of doom, in my eyes.

Zatz reported today that Movie Gallery (an East Coast movie chain) is buying them (for under $10 million – ouch), and I wonder what they will do.  Here are the “big” options I see:

• Keep it running as is, tie in the Movie Gallery brand. 
  This is probably the worst option for them.  The current service just isn’t compelling enough against all the new VOD, IPTV, and HD options from a huge variety of players (including Joost, which I’m now trying out – more on that soon).
• Shut it down, leverage the MovieBeam brand for a new IPTV service.
  Not bad, as the name does have a nice ring to it, and they have already cleared a huge hurdle of IP distribution rights.  $10 million isn’t a bad deal to get all the relationships with Hollywood in the IP arena (which is virtually completely different that running a video store).  Not bad, but also probably doesn’t have enough legs for longevity.
• Switch the model into service-based, compete with Netflix.
  This might be the most obvious and logical model for the company.  By using the box, they can offer a subscription service with no need for mailing anything.  Granted it still uses the same datacasting system, but with their access to content libraries combined with a huge customer base, offering it up as a $9.99/month (free loaner box) package could be compelling.  Also, the HD content is a nice plus here.
• Do the above, but add Ethernet for live streaming and community features.
  If the MovieBeam box was able to stream content live, as well as give me a nice suite of personalization and community/social features, I think we’re in the money.  Especially if I can access huge libraries of content, manage my ‘queue’, select movies to watch with friends, etc.  Also, this opens up the notion of partnerships with Joost or even TV studios for new service opportunities.

Now nothing they are going to do will help improve the performance of the remote/box, but that doesn’t mean they can’t spin out a new unit in the next year.  I hope they look at this as a chance to innovate and differentiate.  I hope they see the potential of what could be done in a “digital home gone right” scenario. 

Nobody’s done it right yet, but the Xbox 360 is close, and Apple TV could be a good shot.  We’ll see if MovieBeam comes back with a vengeance, or just fades into the obscurity of interesting convergence ideas gone wrong (where it enjoys the wonderful company of the Audrey).