Zediva, a startup with a unique approach to online movie streaming, was ordered to shut down its service by a U.S. federal judge for running afoul of copyright law.
The site offers inexpensive movie streaming via a Silicon Valley-based data center that houses a number of DVD players and DVDs, which users could effectively rent and use over the Internet. Rather than physically shipping discs to consumers, Zediva would allow them to control their DVD players via their Website. It was this unusual model that, its founders believed, exempted Zediva from the usual streaming licensing rules faced by competitors like Netflix. It also enabled them to charge much lower rates for movie rentals and make those movies available sooner than other video on demand services can.
U.S. District Judge John Walter did not agree with Zediva’s interpretation of U.S. copyright law, siding with the Motion Picture Association of America, who filed a copyright suit against the company only a few weeks after it launched.
The ruling is not terribly surprising. When it first launched in March 2011, Zediva was met with some intrique, but also with nearly universal skepticism over whether what it was doing was legal. GigaOm’s NewTeeVee said that “while it’s a compelling idea, Zediva’s business model is legally questionable,” with several other media outlets expressing the same sentiment.
The case should serve as a cautionary tale for startups whose business models hinge too heavily on legal loopholes, especially when they’re going up against organizations with the size and legal might of the MPPA.
For their part, Zediva isn’t going down without a fight. “Zediva intends to appeal, and will keep fighting for consumers’ right to watch a DVD they’ve rented, whether that rental is at the corner store or by mail or over the Internet,” the company said in a statement.
Photo courtesy of Flickr user steakpinball.
