Zediva settles with MPAA, permanently stops streaming DVDs and pays $1.8 million

Zediva’s founders thought they hit gold two years ago. They thought up a way to stream new movies without paying royalties, or bowing to the 28-day waiting period studios impose on video-on-demand services. The courts didn’t agree. This week, Zediva settled with the Motion Picture Association of America for $1.8 million and received a permanent injunction for its troubles.

In case you’re curious, Zediva’s idea was to use physical DVDs for each and every showing, inserting them into servers with optical drives, so that no two individual copies could be checked out at the same time. You’d almost literally be renting a DVD over the internet, for $1.99. Unfortunately, in 1991, the courts ruled that a hotel that transmitted videocassettes to their guest’s rooms were violating the studios’ exclusive rights to public performances of their work, even if the “public” consisted of a single person at a time. In August, when Judge John Walter rendered a preliminary injunction, Zediva said it would appeal, but it appears that’s not going to happen any longer and the firm has reportedly already laid off its employees. So long, Zediva.