Kaleidescape is Shutting Down: Interview with CEO Cheena Srinivasan
‘My prayer is there comes a buyer out of this,’ says Kaleidescape CEO Cheena Srinivasan, as iconic maker of home automation-friendly movie players runs out of money.
Kaleidescape, the icon of high-performance movie players, lossless video downloads, elegant home automation integration and beautiful user experiences, is shutting down.
The brand has become a staple in virtually every high-end integrator’s portfolio. If you wanted bit-for-bit video rendering from a DVD, Blu-ray or movie download, you used Kaleidescape. If you wanted the most elegant user interface available, you used Kaleidescape. If you wanted instant access to the best scenes in any movie, you got it with the press of a button through Kaleidescape’s exhaustive curated metadata. If you wanted premium integration with a home-control system, Kaleidescape was your go-to brand.
But all that high quality came at a very steep price and Kaleidescape ran out of money.
“I never planned for this day,” an emotional Cheena Srinivasan, Kaleidescape CEO, tells me. “This channel has become family for us.”
Srinivasan says the company has come close to finding a buyer, but was unable to finalize any deal.
Kaleidescape began life in 2000 with a movie server that enabled users to copy their DVDs, store them on a hard drive and play them through an elegant UI.
By 2005, the company had earned such a (great) reputation in Hollywood that the movie studios, as represented by the DVD CCA, sued Kaleidescape on the grounds that it enabled users to rip/copy DVDs -- a mortal sin in Hollywood. (See: DVD CCA Is an Innovation-Stifling Cartel.)
It was a long and expensive legal battle that finally ended in 2014 with a settlement that basically left Kaleidescape unable to sell its flagship DVD-copying machines anymore.
“We want to make sure the beautiful work we’ve done doesn’t go to waste. The world deserves to see how close to the finish line we were.”
Fast-forward to 2016 and the company has moved to a cloud model, inking deals with six of the seven top studios to create an online library for movie and TV downloads in the highest resolutions available.
In 2012, Kaleidescape “set an audacious goal to compete with the Goliaths” of cloud-based content, Srinivasan says. “We convinced all seven studios to compare us to a mini-Amazon or Apple but for the premium market.”
It was an expensive proposition to create an online movie store, build a storage unit (server) and endure security and quality audits from the studios.
Security in particular was a major project, given the bit-for-bit downloads that only Kaleidescape offers. But the company delivered an end-to-end ecosystem that was completely locked down, and the studios bought in.
“Basically we had sky-rocketing costs,” Srinivasan says. “We had the solution, but we had to spend money. We exhausted our financial resources.”
Kaleidescape tried “very hard” to raise money, he explains, but new funding didn’t come through.
Back in 2014, the company explored the potential of licensing its technology – not just the content-management platform that makes the company so famous, but the rock-solid security architecture that is unique to Kaleidescape.
That plan fell flat, but Srinivasan believes in the high value of Kaleidescape technology.
What’s Next for Kaleidescape?
First: Who would buy Kaleidescape?
“Anybody that feels basically that there exists a market of cinephiles -- movie lovers that do not want to compromise on the experience, yet want to benefit from [content] delivery, from a cloud-based architecture,” Srinivasan says.
He is absolutely convinced that there is a big market of cinephiles, noting the success of Sony’s new premium Z-Series 4K TVs, which apparently sold out in the first day.
Was it a mistake for Kaleidescape to focus solely on the premium market, delivering the highest quality lossless video possible?
It’s hard to tell, but it was the luxury experience that was the company’s lifeblood, dating back to its launch in 2000 under the leadership of founder Michael Malcolm.
“We were going to do something super-great,” Srinivasan, a co-founder, recalls. “If we want to do something great, it has to be high quality.”
Over the course of 16 years, Kaleidescape would not compromise. Therefore, it could never get below the $4,000 price point to reach a broader market.
Moving forward, Srivinasan says the company is assembling a “small SWAT team” to wrap up the process.
“We’re going to take care of the customer,” he says.
Yesterday was a devastating day for Srivinasan, having to stand before his “beloved employees” to break the sad news.
“They are family to me,” he says.
Srinivasan laments the “death of an icon” and hopes that someone will resurrect the technology.
“My prayer is there comes a buyer out of this,” he says. “We want to make sure the beautiful work we’ve done doesn’t go to waste. The world deserves to see how close to the finish line we were.”
From the Archives: DVD CCA Is an Innovation-Stifling Cartel
UPDATE: Posting on Kscapeowners.com, a Kaleidescape dealer writes:
I spoke with the CEO, he did confirm that the company has effectively halted most operations, and instituted layoffs of most employees. The reasons are not really important at this point, but obviously are finance related as is the case in almost all such closings. He was genuinely concerned about the impact this will have on all K owner's, but wanted to make it clear that he will do whatever is reasonably possible to try and continue some form of support for current owners. The ability to do this is contingent on many factors falling in place as the process of restructuring moves forward. Lawyers are involved as well, so naturally they will have an impact on how this all evolves, and what the company can and cannot say in the coming weeks/months, so don't expect much in the way of answers in the short term.
As already pointed out by one member (above), the Store is still operational, so for those with stored content in the Store (i.e. purchased movies waiting to download, or Store bought movies that have been deleted from a server but available to re-download), I would take steps to download that content as soon as possible. There is no guarantee as to how long the Store will remain open, it could close at anytime.
Julie Jacobson, recipient of the 2014 CEA TechHome Leadership Award, is co-founder of EH Publishing, producer of CE Pro, Electronic House, Commercial Integrator, Security Sales and other leading technology publications. She currently spends most of her time writing for CE Pro in the areas of home automation, security, networked A/V and the business of home systems integration. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, earned an MBA from the University of Texas at Austin, and has never taken a journalism class in her life. She's a washed-up Ultimate Frisbee player currently residing in Carlsbad, Calif. Email Julie at [email protected]
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