New service exploits copyright loophole by playing DVDs on its own DVD players, and streaming you the output. Think of it as a wall of Slingboxes, available for rent.
Want to stream a movie over the Internet that's not available for streaming on a service like Netflix or Amazon? Zediva can stream films that you can only get on physical DVDs--through a goofball workaround that actually has strong legal precedent.
Zediva rents you a DVD but keeps the DVD in a player in its own facility. You then control this player remotely from your computer, and the output is piped over the Net to you. Think of it as a wall of Slingboxes, available for rent. If you want to watch a movie online that's only available on disc because it's in the pre-streaming, DVD-sales-only "window," this will punch through that restriction.
Or will it? The service just launched today, and in my quick test, at about 5 p.m. PT, only 6 of the 49 "new releases" on the site's main movie selection screen were available for viewing. The marquee title, "The Fighter," was available, but "127 Hours," "Megamind," "Due Date," and most other titles were marked as "rented out." Unlike services such as Netflix, which can stream as many copies of a single video as it has bandwidth to support, Zediva only has so many copies of each DVD, and each lives in its own dedicated DVD player. When all the players holding a given movie are in use, nobody else can rent the film.
Zediva founder Venky Srinivasan says the balance sheet on this mechanism works out, and the company can grow to support demand, but he does acknowledge that there will be periods of high load that may make some films unavailable to some users. An e-mail (and later, SMS) alert system will tell users when the movies they want become available again.
The Zediva streaming experience is, by nature, much more like watching a DVD in your living room than streaming from other services. The service can try, on your behalf, to skip past the annoying previews and FBI warnings on a DVD you've rented. You can see it trying. It's just like when you angrily mash the buttons on the remote yourself, trying to get... to... the damn... movie.
In my trial, unfortunately, just as my movie ("Dinner for Schmucks") was starting, Zediva threw me a connection error and disconnected me from my player. When I tried to play it again, it told me my film was rented out. Not an auspicious early experience.
Launch-day capacity issues can be solved, of course. What we may be more concerned about is Zediva's future fighting the movie studios. But there is at least precedent for this idea. Zediva buys retail DVDs, and the first sale doctrine lets them rent those DVDs to consumers.
Furthermore, the place-shifting service Slingbox is legal, and so is the concept of the "networked DVR," which is conceptually similar. Media industry disruptor Michael Robertson explains a key place-shifting ruling: As long as the consumer is pressing the buttons--even remotely--it doesn't matter where the video stream comes from. This argument may be extended to include the playback of rented DVDs. Zediva has not yet be challenged in court, Srinivasan says, but his company is "adequately capitalized" to mount a legal defense if necessary. (He would not disclose details of his financing).
"We are confident that the law allows consumers to watch DVDs that they have rented. We hope the studios will see us a partner," Srinivasan says, adding that he makes sure Zediva stays in "strict compliance" with the law, that there's no back-room caching going on to boost availability of services.
There are consumer benefits to the service, not the least of which is the (theoretically) instant gratification of being able to stream a film that's not available any other way except via physical DVD. Rental prices and terms are competitive. Movies cost $2 to rent and users have two weeks to watch each one. (Some other streaming rental services, like iTunes, only give you 24 hours once you press play.)
Zediva is crackpot, but appropriately so, as it highlights how crackpot current laws and contracts are in the movie industry. It makes a reasonable person's head hurt to think that streaming content from a physical DVD player instead of from a identical electronic copy of the DVD somehow makes it legal. We don't know yet how the movie industry will react to this service. In an uncommon display of reasonableness, it has not so far done anything.