If startup Zediva Inc. has its way, Netflix won't be the DVD-kiosk industry's only major player.
The Sunnyvale, Calif., company is offering its own movie-watching service, charging $1.99 per movie through an Internet connection. What makes Zediva different from Netflix is that it's ignoring the 28-day restriction put on newly-released movies to which Netflix Inc., Redbox and BLOCKBUSTER Express kiosks must adhere.
Maybe "diva" is in the company's name for a valid reason. I wonder if they eat only the red M&Ms, but more importantly, I want to know how the industry's newest player is circumventing the 28-day delay.
According to Zediva's website, the team, made-up of five tech-savvy gurus — including the CEO who used to be an actual rocket scientist at NASA — has been tweaking the concept for the last two years to find a "legal" way to offer newly released movies before its competitors.
How it works
Zediva buys physical copies of the movies it rents to its viewers, and ties the Internet streaming of each movie to a physical DVD and player kept at its data centers.
After signing up on Zediva.com, viewers can rent a movie for $1.99 and have 14 days to watch it. However, they can only watch the movie in four-hour increments because — remember — Zediva only has a certain number of copies to rent out to help it avoid the 28-day delay. A movie paused for longer than an hour gets automatically returned to allow other users to rent it. However, they can re-rent the disc (as long as it's available) anytime within the free re-rental period.
Is it really legal?
No, according to Copyright lawyer Bob Garrett, who told the Associated Press that the service was "cute but illegal." He said there's a clear difference between brick-and-mortar movie rental stores (that don't adhere to the 28-delay) and Zediva's online service because Zediva is transmitting programming over the Internet, which requires a separate copyright permission.
Although Zediva CEO Venky Srinivasan never returned my messages, he told the Associated Press that his company is renting DVDs just like any DVD rental service.
"It's the same as what has been done for the past 30 years," he said.
Garrett disagreed, however, saying in the AP interview that there was a "long line of cases" that tried to do essentially the same thing, though using different technologies.
For example, a hotel in California was playing DVDs and video tapes on a machine at the front desk and transmitting movies up to individual hotel rooms on demand.
"The court said it was a violation of public performance right," Garrett said.
In another case, the hotel gave guests the physical DVD player and movie to take up to their room. That was not a violation.
"The difference is the transmission" Garrett said in the story. "That's what converts it into a public performance."
Is Zediva a real contender?
Neither Netflix, Redbox nor NCR Corp., the company behind BLOCKBUSTER Express kiosks, would comment when I posed the question.
In its favor, Zediva has already made available several new releases, including, "127 Hours" to its customers, that Netflix, Blockbuster Express and Redbox can't release until March 29. And based on the message I saw on its website — “We’re sorry. Registration is temporarily full ” — consumers are on board with the concept.
However, I wonder if there will still be a waiting list if/when the company is put on the same playing field as its competitors. Until then, Zediva could make a little noise — that is if it can move customers from its waiting list to its "now-serving" list.
Do you think Zediva will be a major player in the movie-renting industry? Leave your comment below.
Cherryh Butler has been a reporter for nearly 10 years, writing on a variety of topics ranging from the restaurant industry to business and health and fitness news. Before joining FastCasual.com as editor, she oversaw KioskMarketplace.com and PizzaMarketplace.com and contributed to RetailCustomerExperience.com. She's also written for several daily newspapers, magazines and websites, including The Kansas City Star and American Fitness magazine.