Readers of a certain age will recall the beginning days of video rental and videocassette recorders (VCRs). VCRs were cutting edge back in the early 1980s. People would make a trip to a video store, rent a VCR player and a movie, lug it all home, hook it up to the TV and – voila – they could watch that movie in their own living rooms on their own time schedules!

Of course, technology has come a long way since then. Today, a new company has taken video rental almost full circle, allowing customers to rent a DVD player (which replaced VCRs for the most part) and the DVD "virtually."

Santa Clara, Calif.-based Zediva went live with its new streaming service on March 16 after it purchased a large number of DVD players and housed them at a data-center-like facility in California. It also bought large quantities of new-release movies. A customer now can go to Zediva’s Web site to select and order a movie, and Zediva then will stream that movie to the end user over the Internet from a dedicated DVD player.

The business model is similar to that of Blockbuster but, instead of investing in a lot of retail stores, Zediva invests in DVD players and a warehouse.

"It’s a very simple concept," says Vivek Gupta, Zediva’s CTO and co-founder. "We are essentially a DVD rental service like Redbox, only you don’t have to go to a kiosk to pick up. We use place-shifting technology similar to Slingbox."

Gupta wouldn’t say exactly how the video stream gets sent to the consumer’s PC. The company has some proprietary hardware and software to "essentially bump out the signal," he explains, and the output of the DVD gets sent over the Internet.

There are several other things the company is not disclosing at this point. It won’t say how many DVD players it has, how many DVD movies it has purchased, or how many customers have used its service. But scale appears to be an issue.

When Zediva first went live, it caught the attention of some major news outlets, including Wired and The New York Times, and now it’s overwhelmed. The company’s Web site says, "Registration is temporarily closed while we’re building more capacity."

According to Gupta, when the service went live, "We were ready for tens of thousands of users." The warehouse can scale to “a couple million users” but, if the service is successful, the company plans to have facilities around the United States to avoid Internet bottlenecks and streaming variables.

Zediva also won’t divulge the source of its DVD supply, but the company is purchasing its DVDs on the open market. Pundits already have questioned the legality of Zediva’s service and whether it may infringe on copyright laws. Some of the legal analysis has mentioned Cablevision’s successful lawsuit pertaining to remote-storage DVR. (For more, click here and here).

-Linda Hardesty

The Daily

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