Sanjay Gaikwad’s Valuable Group, which owns the digital film distribution service UFO Moviez, appears to have found “value” is a service that just didn’t take off, despite repeated efforts and infusion of investment.

The Valuable Group has bought video-on-demand movie distribution service MovieBeam (site not loading), its assets, trademarks, IPR and alliances, which Disney, Intel, Cisco and other PE players spent over $200 million on, according to a release issued by the company. The acquisition gives the Valuable Group a presence in Los Angeles, and a development facility in Seattle. Gaikwad says that the Valuable Group will invest $100 Million over two years to roll out the service in North America, UK and other markets. They intend to be in three markets by the end of 2008. Ameya Hete has taken over as the CEO of MovieBeam.

Cost of Acquisition
The cost of acquisition is not disclosed, but going by MovieBeams history, and the fact that the seller has filed for bankruptcy, it’s probably much less than $10 million. Don’t buy the $200 million hype – the company was sold to its last owner, reportedly, for around $10 million, and the last owner filed for bankruptcy.

Synergy with UFO Moviez
UFO Moviez, a part of the Valuable group (which has investments from 3i and the Apollo International group), is among the largest digital film distribution services in the world, using satellites to digitally distribute films. The MovieBeam service involves digital distribution of films to set-top-boxes. The acquisition gives the Valuable Group a presence in North America, and the technology for distribution to set-top-boxes.

Issues With Movie Beams Service
Several, by the looks of it: an expensive set-top-box ($200-250), limited catalogue of movies (100), none of the movies that were available on DVD, slow download of the movie. There a large number of issues with the service, detailed here, but there is a positive review here, with lots of screencaps.

The MovieBeam Story
— Launched by Disney in 2005
Jan 2006: The Spin-off, and $52.5 Million in investment from VCs: The service failed to take off, and Disney spun off the company in January 2006; at that time, Disney remained the largest shareholder, with Cisco, Intel Capital, Mayfield Fund, Norwest Venture Partners and Vantage Point Venture Partners investing $52.5 million in the company.
March 2007: Sold! To Movie Gallery, reportedly for $10 Million.
December 2007: Service officially shuts down and Movie Gallery files for Bankruptcy. Details of Bankruptcy filing here.
July 2008: Valuable Group buys MovieBeam. Plans to invest $100 Million in two years.

Given this history, it is unlikely that the Valuable Group bought it for as much as $10 million. Also note that a rebranding of MovieBeam might be in order, given that the service attracted a lot of flack.

Our best wishes (and prayers) are with the acquirer: here’s hoping that they can make MovieBeam valuable.