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Zediva has suspended its operations, ten days after a federal court issued a preliminary injunction against its DVD-streaming service. The shutdown occurred less than six months after the Santa Clara, Calif.–based startup first opened to the public.
Zediva launched in March, offering up consumers a low-cost way to “rent” DVDs and then stream them over the Internet. Rentals of new DVD releases were priced at $1.99 or 10 for $10, compared with the $4.99 typically charged by streaming video-on-demand services like iTunes (s AAPL) or Vudu.(s WMT) The big Hollywood studios, which only received compensation for the initial DVD purchase, weren’t happy with the service, and in April they sued to shut it down.
Zediva tried to argue that its service was no different from renting a DVD from your local Blockbuster store, except, well, that it was transmitted over the Internet. That argument didn’t hold up in court, and ultimately U.S. District judge John Walter sided with the studios, granting a preliminary injunction against the service.
Zediva has vowed to appeal the court’s decision, but in the meantime it has suspended operations. In a message sent by email to its customers that was also posted to its website, the company wrote:
We are suspending Zediva’s operations to comply with an order by the United States District Court for the Central District of California.
While we hope to be back online soon, we don’t know when (or whether) that will happen. We are disappointed by this turn of events, and that we are not permitted to serve you.
We are quite aware that some of you have unused credits with us and appreciate your patience as we figure out our next steps. Stay tuned for more information via email.