There's a new Netflix in town, and it's called Zediva. After a year in beta, the service is now live to the public. DVD rentals are only $1 each in many cases (though some cost more) and Zediva can deliver movies as soon as the title goes on sale to the public--while Netflix typically has to wait a month or longer before they can carry a film.
Not a bad way to make a splash in an already-crowded field of competitors, is it? Offer the same service as Netflix, but for less cost to the consumer and with no limitations on release date windows.
How Does Zediva Work?
So how is Zediva able to bring you films sooner than Netflix? They use a unique twist on DVD rental to skirt the legal issues. When you rent a DVD from Zediva, they don't actually mail you a DVD the way that Netflix does... they actually let you stream the video on your computer. But it's not technically a digital stream either. It's kind of in between.
Here's how it works: Zediva buys DVDs in the stores on the day they're released, just like the average consumer would. Then they go back to their data center, which is teeming with DVD players. When you order a film, it actually is literally played back through one of the many DVD players in the data center, and you have all the standard DVD controls at your fingertips through the computer--pause, chapter select, special features, etc.
"When you rent a movie from Zediva, you have up to 14 days to complete watching the movie. Each time you rent the movie, you receive control of that DVD for 4 hours.”
They view themselves as more of a DVD rental and playback service, as opposed to a streaming or download service. And while I definitely see the difference... it's splitting hairs a bit, I think.
Zediva.com currently says that registration is full, which either means they got slammed by interested new customers after all this press, or they have yet to edit the website now that they're out of beta. Either way, you can't sign up right now, as you'll be greeted with this message:
Why Zediva Won't Work
I'm not sure this business model is the legal loophole that Zediva seems to think it is. Just because you're renting physical DVDs--or, at least sit on new release titles for a month before they can begin to rent them.
For instance, Redbox and Netflix both rent out physical DVDs, and have both been smacked around by Hollywood's legal threats and now have 28-day release date delays before their customers can get a new title. So, how exactly is Zediva's clever system of using physical DVDs going to help them?
Their founder is pretty confident--with a slight hint of defensiveness:
"Zediva buys real authorized DVDs. We are a DVD rental service. The notion of DVD rentals is well established," he said, adding that Blockbuster, Redbox and Netflix all buy some of their DVDs on the open market. "Just like any other DVD rental service, only one user can rent a DVD at a time. If there is more demand, we buy a lot more copies of the DVD. They are all authorized. We pay market price for these. We are not ripping them off or anything. We don't think the studios have anything to complain about. Just like Blockbuster or your local video store, we buy DVDs and we rent them to our customers."
Yes, but Blockbuster was at the mercy of Hollywood for years when it comes to release dates--not to mention that it's not exactly a good omen to justify your business model by comparing it to a company on the verge of bankruptcy.
If film studios came after Redbox and Netflix, you can bet they're going to come after Zediva, and they won't be swayed by the founder's convictions. I guess I feel like Netflix would have fought this issue if they thought they could actually win... but they didn't... they caved to release date window restrictions. So is Zediva headed for a legal showdown? You bet they are.
But even if they weren't, I'm surprised to see them hitch their wagon to a technology that's on the way out: DVDs. I suppose that they could try to transition to Blu-Ray at some point, but even that's on the way out. Eventually the medium will be outdated, just as VHS cassettes are, and film studios will stop producing them. And the next evolution is clearly digital media--no physical "thing" to buy and hold anymore. So if Zediva's big loophole is that they use physical media instead of digital streams... what on Earth are they going to do when that physical medium dies? Seems like a short-lived business concept to me.