Most of the people in my industry have yet to be affected by this lawsuit, but the implications of this suit on another legal battle winding its way through the judicial system may impact some of our bottom lines. The other suit is Kaleidescape vs. DVD CCA.
Kaleidescape makes a really spectacular DVD server solution. Basically, you load all your DVD's and CD's onto their servers, place their players in any room in the house and you can, watch or listen instantly in as many rooms as you want to or can afford. The system copies the ENTIRE disc bit for bit, encryption and all, and sends it over network wire to its players. In a sense its a very closed system architecture, which is why it works so well (think Apple for closed system architecture)
The DVD CCA is a group responsible for the copy protection on all DVD's (which is known as CSS), they developed it and they go after anyone trying to make their copy protection be used in a way that they haven't drawn up or ways they couldn't imagine. Mind you, i didn't say in illegal ways, I said different ways. Also keep in mind that I said make (as in use) their copy protection, not circumvent or not use.
Now one more bit of interesting information for you to ponder before I get back to my article here. Aside from lawsuits and some other various things, Kaleidescape and the DVD CCA are joined by one common bond. THEY BOTH LEGALLY LICENSED CSS SOFTWARE. Further, quite a high number of companies DID NOT license the CSS software AND HAVE NOT BEEN SUED AT ALL BY DVD CCA.
With all that being said, because of how the DVD CCA is working this legal issue, they are going after a 'small' contractual matter vs. the larger 'fair use' matter that has been upheld by the Supreme Court quite a few times ( Sony Corp. of America v. Universal City Studios being of the most famous cases) Because the RealDVD matter has been settled, i'm sure we will see the DVD CCA use this as precedent to help beat Kaleidescape in their appeal
I'm sure the few of you that have read this far are wondering when i'm actually going to get to my point of how this affects the AV industry bottom line, and I am, now.
If Kaleidescape loses their appeals they will likely be required to shut down their DVD server side of the business, which is the majority of the their business model. The sad thing, aside from loss of profit dollars for the AV industry is we lose the gateway to a really fantastic business for a few years. We lose the ability to sell products that allow the consumer (albeit at this point an extremely high end consumer) a product that fills a very cool transition point in our business, content management for legacy sources and current sources (once they decide to go down that path).
Kaleidescape makes an internet connected device that takes your current DVD's and CD's (and perhaps BluRay if they can get the player out and the ability to rip the data to the server) and puts them on a hard drive you can use anywhere in your home, we get that. It also has the ability, whether Kaleidescape wants to or not, to become a content manager for digital only content- iTunes music, existing mp3's, Netflix on demand, all of these features can currently be handled by a cable box or a TV set in some cases so why wouldn't Kaleidescape? They haven't gotten to it yet. This is what we lose, a really great transitional product and we lose the competition Kaleidescape would have if the cost of entry wasn't so steep (legal battle after legal battle and lawyer hourly rates). We all know, if this wasn't a legal minefield, we would see competitors like Kaleidescape at $2-3K vs the $9k starting price of a Kaleidescape mini-system, and we all know Kaleidescape would have freed their money and resources to keep Kaleidescape at the top of the field in other ways, be it in content management, or more advanced hardware.
Overall, this is a loss for the consumer at this point and the AV industry as a whole too. AV lost the ability to look out for the best interests of their clients (and make a profit as the expert) and consumers lost out on a product that when price wars did what they always do, would've allow people to take their CD's and DVD's, put them in the attic or closet and still have access to their existing physical media library, while continuing to buy the newest content online and have it all in one place that's easy to manage.
I know it doesn't sound like much of a loss, but it is a loss. It was one of the few times that the industry got it right. We gave people a transition vs. a cutoff, and for a change, its not even the fault of the consumer electronics industry that it didn't work. Let's all hope that Kaleidescape is successful in their latest appeal, and we get to see this small part of the AV industry bloom into what it should be, not die on the vine.
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