Can Warner Bros. Save Kaleidescape?

“It’s one of the only things that was missing,” says one dealer.

The new Kaleidescape Store opened this week with a couple thousand movies from Warner Bros. (The company told me that the store would also offer TV episodes at launch, but I’m not seeing any. In fact, I’m not even seeing a place to look for TV shows.)

Kaleidescape is widely viewed as the best quality movie server when it comes to reliability and user experience. It also is the most expensive.

Price is no object for movie lovers with lots of discs. In the traditional Kaleidescape model, DVDs and Blu-rays are hand-fed in the servers and copied bit-for-bit.

RELATED: Kaleidescape Dealers React to Warner Bros. Downloads

But physical discs are a dying breed, and we’ve heard from many high-end dealers recently who can no longer justify the price of Kaleidescape given the many alternatives. Vudu’s HDX 1080p streaming, for example, is pretty darn good.

Clearly Kaleidescape recognized that it could not sustain its business on disc-copying alone (although there’s plenty of life left), so bravo for them for initiating the store.

Warner Bros. is the first and currently the only studio to announce a licensing agreement with Kaleidescape. The big question is: Will others follow?

It is understandable that the content distributor wanted to work with Kaleidescape to deliver the highest-quality digital downloads ever available. Warner is progressive in that way and Kaleidescape has the knowledge and the influential dealer base to pull it off. The server manufacturer made for a strong partner in this initiative.

Warner Bros. needed a test bed. Kaleidescape was a good one.

Assuming the experiment works out, the studio will look for bigger opportunities to sell high-quality downloads to the masses. Once that happens – and unless Kaleidescape goes way down-market – Warner Bros. really won’t care about the niche market that Kaleidescape serves so well.

Neither will other studios.

So here’s my prescription.

Kaleidescape needs to step in with a lower-priced solution that employs its stellar user interface but compromises on video quality: think Vudu HDX on steroids with the Kaleidescape GUI.

Sell a multiroom ecosystem for less than $1,500. Gain some critical mass and the attention of more studios, and then use those relationships to continue to improve the top-of-the-line movie servers that have made Kaleidescape famous … and infamous.