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Netflix, Amazon, redbox don't need to lose sleep over this new competitor

March 17, 2011 by James Bickers — Editor, Networld Alliance

This week, a very strange service is coming out of beta, a service that is taking on entertainment giants like Netflix and redbox with a business model that Rube Goldberg would approve of.

Companies like Netflix and Amazon have a negotiated 28-day waiting period during which they cannot deliver new release movies to their customers. This of course gets the studios some early purchase dollars from the people who can't wait, and it means I've gotta go back to redbox a month from now to get "Sharktopus."

But Zediva, a five-person start-up located in Santa Clara, Cal., thinks it has figured out a way around that restriction: When you rent a film from them online, you're renting a physical copy of the DVD, and an actual DVD player, located in their data center. The content is never digitized and saved as a file for streaming, it's streamed straight from the disc — hence the end-run around the 28-day restriction.

So in a weird, convoluted way, the process is more like renting from a brick-and-mortar store than streaming. You're just watching this physical copy from a remote location, using either your computer or a Google TV device as the "remote." And that's another oddity about this: Since you're actually watching a DVD, you have to suffer through previews and Interpol warnings. You navigate the menus just like you would with a disc at home, which gives the service one of its few unexpected positive attributes: Users can turn on subtitles and activate different language tracks, features the big boys of streaming don't have (yet).

And then there's the surreal experience pictured to the right: Since each copy of each film can only be viewed by one person at a time — it's a physical copy, after all — you get the odd experience of finding that many films are "out of stock." Hey, at least "Burlesque" is available, so it's not all bad.

This is an innovative idea, but let's be frank, it's a silly one, and there's no way it can scale. Reed Hastings will not lose any sleep tonight.