Walt Disney Co.'s short-lived on-demand movie service, MovieBeam, is flickering back to life.

MovieBeam received $52.5 million in private equity investment from the likes of Cisco Systems Inc., Intel Capital (Intel Corp.'s private equity arm), Disney, and investment partnerships Norwest Venture Partners, Vantage Point Venture Partners and Mayfield Fund, according to a MovieBeam filing with the Securities and Exchange Commision announcing the private placement investments.

Originally launched in 2003 as an on-demand movie service, Disney created its own set-top boxes pre-loaded with 100 movies, delivering 10 new movies per week for a monthly subscription fee plus per-movie rental fees. MovieBeam service was suspended in early 2005 for what the company called "technology upgrades." By mid-2005, Disney company filings revealed it was seeking to refinance the operation and give up its majority stake. Disney eventually decided to write off the investment, taking a $24 million charge in the third quarter of last year.

The potential resurrection leaves more questions than answers. MovieBeam officials declined to comment beyond the SEC filing, saying they plan to make an official announcement about the re-launch Feb. 14. But sources close to the matter said the new MovieBeam will be a different company with a service offering that's unlike its previous incarnation. Disney is reportedly the chief investor, and the other companies have been tightlipped about their stakes in the venture.

MovieBeam is set to enter an already crowded marketplace, as video-on-demand is taking off and digital-recording-device set-top boxes are being integrated into cable boxes.

Burbank-based Xow! Inc., an entertainment and technology marketing company, last week launched a platform called Xipster for creating viral marketing videos. The platform was launched in partnership with RealNetworks Inc.'s Rhapsody digital music service, a Seattle-based competitor to Napster Inc. The Xipster platform allows companies to create several animated video clips (called XipClips) for e-mail ad campaigns, with a twist: The videos are sent to potential customers, who can choose from a variety of scenes to create their own videos, and send them along to friends. Users can upload their own photos to the videos, placing themselves or their friends as the main characters.

The Rhapsody viral-video marketing campaign will run for three months. In "choose-your-own-adventure" style, the ad has six different video-clip scenarios to choose from and put together.

"It's all about mashing up and creating your own funny little movies," said Jeff LaBarton, chief executive of Xow! "It's designed to get people sending these videos around and spreading the word about what Rhapsody is up to."

Originally an animation software company, Xow! Studios' animators and digital artists create the videos and all the different scenes, based on what companies like Rhapsody want in their message. After that, the person who receives the e-mail takes control, using the ready-made scenes for their own movies. "We think there's a sizable base of the market who want to be able to customize their commercials and entertainment, but with minimal effort," said Tony Levattan, chief marketing officer for Xow!. Companies can specify which elements of the video are available for customization by users such as characters' faces, for example.

*Staff Reporter Hilary Potkewitz can be reached at 323-549-5225, ext. 226, or at hpotkewitz@labusinessjour-nal.com .

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