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Disney to shutter little-known movie streaming service

Media giant to close down Disney Movies Online at the end of the year, with a replacement service in the works.

Disney will close a little-known Internet movie streaming service at the end of the year, apparently unable to generate enough interest or revenue.

Disney Movies Online, which allowed people to rent and buy streamed movies from the Disney library, including those made by subsidiary Pixar, will shut down on December 31, the media giant announced today in an e-mail to customers and notice posted to the service's Web site. It also allowed titles that had been purchased as DVDs and Blu-rays to be streamed online.

Purchases can no longer be made on the site, but customers can continue to stream existing movies until the end of the year. People who previously purchased movies on the site can apply for a refund.

"The digital environment is rapidly evolving and Disney Movies Online does not have the flexibility that many users today demand," a Disney spokesperson said in a statement. "We made a business decision to close the service until we are able to provide the greatest value and experience to our customers."

Disney is currently developing a replacement service called Disney Movies Anywhere, but today's announcement did not indicate when that effort would be launched.

Disney Online Movies is not the first movie service Disney has tried but then axed. In 2003, the company introduced a video-on-demand service called MovieBeam that let users download and store films via a set-top device. However, Disney shut it down two years later after it failed to effectively compete with other types of video service providers such as Netflix and Amazon.

This is the information Disney provided to customers today:

Disney Movies Online is closing on December 31st. As part of this change, purchases, upgrades, and Magic Code entries can no longer be made on the Disney Movies Online website. You can continue to stream your existing movies until December 31st.

You can still enter Magic Codes on, and Disney Movies Rewards services will not be interrupted. You can also continue to use your Disney member name and password to access and enjoy other Disney websites. In addition, if you purchased a Disney Combo pack with Digital Copy, your Digital Copy can still be transferred and watched from either iTunes or Windows Media Player.