I was recently introduced by a friend of mine to a new online, instant video streaming movie rental service called Zediva.

 

This new startup has developed an innovative approach to movie rentals which gives it a distinct advantage of allowing it to offer new release movies that are not yet available for instant video streaming on Amazon, Netflix, iTunes or any of the other web video streaming platforms… Additionally, it offers these new releases for around $2 for a 14 day rental.

How they do it.

The whole model is quite frankly one of those “wow… why hadn’t anybody thought of that before?”

Rather than following the approach of all the other video streaming players, digitizing and converting each movie into bits and bytes to be played to many people from a hard drive… Zediva rents out an actual physical DVD playing on an individual DVD player to each person who rents out a movie from them.

As described on the Zediva website FAQs:

“When you rent a movie on Zediva, you are renting both a DVD and DVD Player in our data center. During the period of the rental, the DVD and the DVD Player can only be used by you.”

This unique approach allows them to instantly offer new releases on DVD upon their release date for instant viewing over the web… something the other video streaming players cannot do since their licenses require them to wait for a certain period of time before making the movie available for digital play.

Movie Industry Not Happy

This approach and workaround of the timing on when to offer the movie for instant streaming is upsetting many of the main established players in the movie business.

The Motion Picture Association of America has already filed a lawsuit against Zediva seeking compensation and the immediate closing of the new startup for allegedly running a business based on copyright infringement. In response, Zediva has filed a countersuit stating that it is nothing more than a “digital version of a DVD rental store.”

In their defense, Zediva has stated in the counterclaim:

“The only difference between watching a rented DVD on the DVD player in one’s living room and watching a rented DVD using Zediva is that rather than connecting to the DVD player with a short cable, Zediva lets users connect to the DVD player over the Internet.” (.pdf)

A Legal Loophole?

Zediva claims that they can legally rent the movies out since, like traditional video stores, they don’t need to get permission from the studios to rent out discs. According to the first-sale doctrine in U.S. Copyright law, once they buy the DVD they are free to rent it out or re-sell it.

The major studios are not satisfied with that legal explanation and continue to claim that, unlike traditional DVD-rental stores, Zediva needs an additional license from them because it is transmitting “performances of movies to the public over the internet.” (.pdf)

 

Future Still Uncertain

The jury is still out on whether Zediva will win over the major studios and manage to establish itself as a major player in the online movie rental space when there are already such strong competitors as Netflix, Amazon, iTunes and the new Dish network owned Blockbuster.

Personally, I give Zediva two thumbs up on innovation and for developing a process that so seamlessly blurs the line between offline and online to deliver a valuable product.

At the time of this posting, Zediva is currently not accepting new members as they are at “maximum capacity.” Still, they are taking emails to receive invitations when they have more availability.

 

Personally – I can’t wait to try it out…

I’ve already registered my email with them to be updated of when they’re accepting new members as I would love to try the service out… If only just to see how the whole technology performs on my computer screen while I imagine my rented DVD playing on a distant DVD player farm.

 

How About You?

What do you think about Zediva and its disruptive business model?

Do you think it can compete and thrive against Netflix and the other established players? Will it lose its legal battle against the major movie studios?