Cisco and venture partners invest in MovieBeam

Cisco Systems said it has made an investment in MovieBeam, an on-demand movie service created by the Walt Disney Company and spun-off in January.

Cisco joined Disney and several venture capital firms including Intel’s Intel Capital, Mayfield Fund, Norwest Venture Partners and Vantage Point Venture Partners to invest $48.5 million in MovieBeam.

With its recent acquisition of Danish firm KiSS Technology A/S, manufacturer of a networked DVD player, Cisco entered the digital video market. The company, known for its computer routing gear, is also spending $6.9 billion to acquire Scientific-Atlanta, the cable set-top box maker.

Disney, who remains the venture’s chief investor, launched MovieBeam in 2003 in three test markets. Last year, it suspended the service and announced plans to launch a larger venture. It is not known when the service will resume.

The original MovieBeam service sold a television set-top box preloaded with 100 movies and delivered 10 new movies a week. Customers paid $8.99 a month to subscribe to the service, plus rental fees between $1.99 and $3.99 per movie.

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