Startup's DVD-Streamed-Over-the-Net Service Called 'Cute But Illegal'

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A five-employee startup, Zediva, is claiming to beat Netflix and Redbox in delivering new releases — instantly — over the Internet to a computer, Google TV device or Android smartphone.

Of course, the company may get sued out of existence by Hollywood before it gets any traction.

Zediva’s model: When a customer rents a DVD, the copy is not delivered physically. Instead, the movie is streamed from the company’s Silicon Valley data center, played out from banks of DVD players, over the Internet. Rental price: just $1.99 per movie (with 14 days to watch it).

The AP, in a story about Zediva, quotes copyright lawyer Bob Garrett calling the service “cute but illegal.” Legal precedent is on the side of the content owners in shutting down these sorts of services, he said, citing the case of a hotel in California that played DVDs from the front desk and transmitted them to individual hotel rooms on demand. “The court said it was a violation of public performance right,” Garrett said.

Earlier today I spoke with Venky Srinivasan, founder and CEO of Zediva, who insisted: “We are quite confident that the law allows a user to watch a DVD they have rented… From our side, we have done our homework.”

He said Zediva purchases DVDs at market prices, just like Redbox, Netflix or Blockbuster, and then rents them — just not the physical copies. “It really is like having a really long cable and remote control,” Srinivasan said.

Zediva currently offers 109 titles for rent right now, including The Social Network, The Fighter, 127 Hours, Hereafter, Love and Other Drugs, Avatar and The Next Three Days.

Sunnyvale, Calif.-based Zediva was founded in 2008 and has received outside financing from investors, whom Srinivasan declined to identify. Srinivasan, who has a PhD in chemistry, was once “an actual Rocket Scientist at NASA,” according to the bio on the company’s site.

It seems a sure bet that the studios will demand Zediva negotiate Internet streaming rights, or else tell them to cut it out. After all, wouldn’t Netflix have thought of this idea — and rejected it — already?

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