Dothan, Ala. - Movie Gallery, the nation's second-largest movie rental chain behind Blockbuster, announced on Wednesday that it has acquired most of the assets of MovieBeam, the on-demand movie distribution service created by Disney, for less than $10 million.

Backed with some $70 million in funding, the service initially launched in 2003 in three pilot cities, serving movies to a set-top box over unused portions of the broadcast spectrum using technology called "datacasting."

The trial was shut down by Disney in 2005.

MovieBeam was then spun-off from Disney and re-launched in February 2006 with over $50 million in venture capital, from Mayfield Fund, Norwest Venture Partners, Cisco, Intel, Vantage Point Venture Partners and Disney's ABC.

The service as it currently exists is available in 31 U.S. markets, and will give Alabama-based Movie Gallery an alternative delivery technology to compete with rivals Blockbuster, Netflix, Wal-Mart, Amazon and others.

"Our acquisition of MovieBeam is the first phase of our long-term strategic plan to provide digital content to consumers," said Movie Gallery chairman and CEO Joe Malugen.

"We will begin merchandising the MovieBeam service in our Hollywood Video and Movie Gallery stores and on our websites in the near future and we have exciting plans to build upon the existing content digitization and broadcast platforms."

Related Links:
http://biz.yahoo.com/prnews/070307/clw082a.html?.v=2

http://biz.yahoo.com/ap/070307/movie_gallery_moviebeam.html (AP)

http://www.moviegallery.com

http://www.moviebeam.com