Cheena Srinivasan, Kaleidescape CEO at 2015 CEDIA Expo

Despite attempts in recent years to re-invent itself into a cloud-based Blu-ray-quality movie download service, Kaleidescape revealed Sunday that it is shutting down.

According to report by custom electronics trade publication CEPro, the company shutdown after running out of financing to take the business further.

Kaleidescape started out in 2000 selling movie servers that would transfer content-protected DVD movies and TV programs to an internal hard-drive for easy storage and access to huge digital movie libraries. But after failing to win a legal battle with Hollywood over the handling of copy-protected material, Kaleidescape attempted to start a cloud-based download service for high-quality videos. The operation had started to gain momentum, but not fast enough to keep up with expenses, according to the report.

Read more on the Kaleidescape’s closure after the jump:

The beginning of the end came after Kaleidescape failed to win a protracted legal fight with Hollywood studios over how it circumvented digital copy protection systems. A settlement effectively ended its unique DVD transfer system.

The original system had “transferred” copies of DVDs with encryption and all to a hard drive server, without technically breaking the content projection that was in place. Kaleidescape had argued that its system was designed to work with studios looking to sell disc-based movies, but the content producers didn’t see it that way.

After the parties settled the case two years ago, Kaleidescape moved on to create Blu-ray jukeboxes and a high-quality movie download service sanctioned by most of the studios it had fought.

Prior to the decision to shut down, the company’s cloud-based movie distribution model had reached licensing deals with six of the seven top studios. It had moved on to add 4K quality movies and TV downloads for Kaleidescape server/players in the home.

Cheena Srinivasan, Kaleidescape CEO, announced the closure in an interview with CEPro Sunday, after word broke on the company’s forums that the doors were closed and staff had been laid off.

Srinivasan told CEPro that he is hopeful a buyer will step forward and take over the assets so that the service can continue moving ahead. In the meantime, a small team was left in place to deal with customer care.

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Although Kaleidescape identified a sustainable group of consumers still interested in buying high quality video downloads, its product line was prohibitively expensive to all but the very well heeled. Pricing for the Kaleidescape 4K Strato movie player started at $3,495 without a hard drive included.

Kaleidescape added a downloadable service that was a little more mainstream, but its resources were exhausted before the foundation was firmly in place.

By Greg Tarr


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