The Engadget Interview: Michael Malcolm, CEO and founder of Kaleidescape
Give me the 30-second rundown on Kaleidescape – what do you do, where are you located, when were you founded? We were founded four years ago this week. We're a privately held company based in Mountain View, Calif., with engineering labs in Waterloo, Ontario. We have about 45 people working for us. We originally got interested in how entertainment-quality motion pictures could be distributed to people's homes through the Internet. We looked at all the facets and filed a number of patent applications for things like overlay distribution network architecture. We finally concluded there wasn't a good a platform for delivering movies to the home and decided to focus on the high end of the market first.
Why the switch? Isn't the Internet ready for the delivery of prime-time entertainment?
It was to solve a chicken and egg problem. To do Internet delivery of movies, you need to convince the content owners to license their movies to you, and you need a large enough installed base that it's economically interesting to them. But you need people to buy the platform, and you can't get there without the movies.
That pushed us into supporting DVDs initially. We think in the long term people will want to see high definition movies delivered electronically. In the near term, the vast majority of content in digital form is available on DVD.
We also realized that DVD collection is a national pastime, and a lot of people have hundreds or thousands of DVDs. As soon as you get to 150 or 200 discs, it becomes a management problem in collecting, storing and finding what you want to watch. I was having that problem in my own home with 300 DVDs, and this was a problem that needed a solution.
So tell me about this category. You're in a different sector than DirecTV, Toshiba/TiVo or other high-def digital video recorders, right?
Right. We don't do recording off the air or off cable. We deliver movies on hard disks, and so we're able to deliver them at higher bit-rate encoding. A few of our titles come in the high-definition 1080i format, encoded at 35 megabits per second, or double the rate of broadcast HD. Many more are on the way.
We cater to the high end of the custom installation market. Typically you'll find they've got a large home, several
plasma displays, a media room and projector, three to five viewing zones, perhaps a yacht with 10 to 50 cabins, each
with a separate viewing zone. These are pretty high-end affairs, but the cost is not out of line with the chunk of
change they spend on all sorts of things.
The basic unit starts at $27,000 and some go up to $100,000 for additional storage, server boxes and viewing zones.
All the players are connected by a home Ethernet system.
OK, you can watch movies in a zillion rooms. What else can this baby do? Bake? Clean house?
You can browse your DVD collection in lots of ways. Sort by movie title, by genre, actor, director or running time.
You can look at the details of each movie and its cover art.
You can mark your favorite scenes and locate them immediately. In addition, when you press play it starts with the
movie, skipping over the FBI warning, the trailers, advertising and menu. It also sends cues to the control system by
lowering the lights or setting automatic masking on your home theater system (black velvet panels that move up and down
to accommodate the movie's dimensions).
You're also selling Kaleidescape Collection DVDs ranging in
prince from $1,180 to $6,890. That would make a nice Valentine's Day present.
Certainly.
How are sales of the units?
Somewhat more than 300 systems have shipped. We're just at the beginning of the curve, and we're seeing a lot of
interest in the marketplace.
What do you need in place to get the full effect - a home theater system?
We sell our systems exclusively through custom home system integrators, and they'll be able to feed the output into
any video or audio processors in the home.
Given Hollywood's hyper-sensitivity to digital piracy, I take it these systems come with full digital rights
management armament?
We've taken great precautions to ensure that the stored content is unusable outside the system and can't be uploaded
or streamed onto the Internet. But we use the Internet to connect people's homes to our servers so we can provide the
data about each movie.
So you're not streaming movies yet?
No.
And your units are not portable. Homeowners can't copy, share or burn a single movie, is that
right?
Correct.
You obtained a license from the DVD Copy Control Association to show Hollywood movies on your system. Why are
they suing Kaleidescape?
It's a head scratcher. The DVD-CCA is an industry association of three industry groups: the film industry, the
consumer electronics industry and the computer manufacturers. It's not really clear who's the driving force behind
this.
You'd think the studios would be happy with a system where people have to go out and buy scores of
DVDs.
And that's what happens with our customers: They immediately go out and buy hundreds of DVDs. While there's some
traditional resistance in Hollywood to new technologies, it may be that there are some anticompetitive aspects to the
suit brought by the big CE manufacturers, who don't want to see a major competitor emerge. They're not close to coming
out with a product like ours, and we've got a pretty healthy list of patents.
Their suit says that Kaleidescape must redesign its system to require the presence of the physical DVD disc in
the drive during authentication and playback. That pretty much defeats the whole purpose of your
company.
Exactly. I've read and our attorneys have read the DVD-CCA license specifications over and over, and nowhere does it
say that. If it were true, why can't they point to a specific section of the license agreement that? They can't because
it's not there.
They're afraid of what - DVD swapping?
I don't have any knowledge of that happening. It is not in our interests to be using our system to steal content.
We've done everything in our power to prevent that from happening.
Our rules prohibit that.
Look, today it costs $50 to $60 per DVD just for the storage space, so it's cheapter to just go buy the DVD than it
would be to make a pirated copy onto the Kaleidescape system. What's actually happening is that we've heard customers
tell us they had stopped buying DVDs for about two years because they had no place to store them - they were chewing up
half the wine cellar.
Oh, the tragedy.
Once they got a Kaleidescape system, then they had a way to organize their digital entertainment and they'd go out and
buy DVDs again.
Do you plan to file a counter-action against the DVD-CCA?
It looks that way. We have a lot of support behind us. (See
Editorial: DVD CCA is an Innovation-Stifling Cartel.)
A new generation of DVDs is coming out in the next year. Will Kaleidescape support those newfangled
discs?
It's yet to be seen as to what will be involved to support them. I don't know how rapidly these will take off, given
the industry is divided between two different standards,
Blu-ray and
HD-DVD.
HD-DVD would require a new hardware device for reading them. With our system, one of the nice things about the
architecture is that you just add a new input device on your Ethernet system and you're all set.
What's the next step beyond what your current system can do? Are you in the DVD playback business, or the
movie viewing business?
We're in the home entertainment business. As the cost of these systems continues to go down, we'd like to add
additional capabilities to our system, so you can listen to music to our system, load CDs onto it, download music from
places like iTunes. By the end of this decade, it will become very practical to store hundreds of movies and other
digital media on these systems.
Wake me when the price drops below $1,000.
I think we're five to seven years away from hitting the mass market.
J.D. Lasica is author of the upcoming book Darknet: Hollywood's War Against the Digital Generation.
Reader Comments (Page 1 of 1)
David @ Dec 19th 2005 12:10AM
Okay -
Or you could do this:
Matinee video_ts launching software :
http://matinee.dizandat.com/
Plus a way of getting those video_ts folders:
http://www.ripdifferent.com/
And something to play them on:
http://www.apple.com/macmini/
Probably want to add some network storage and a breakout box to do 5.1 audio. But you can DIY a basic setup for under $1000 ( even less if you do some ugly linux crap )
I have this setup running at home with 1.75TB of storage. Works perfect.
Lane @ Dec 19th 2005 12:10AM
a lot of people have hundreds of thousands of DVDs...
Snuh? Assuming $10-$20 a DVD, "a lot of people" have million-dollar movie collections? Even assuming insane levels of piracy, I imagine the number of people with hundreds of thousands of DVD-quality movies is pretty darn small.
OK, I assume this is "hundreds or thousands," which frankly still seems like an awful lot to me.
ElCapitanAmerica @ Dec 19th 2005 12:10AM
#2 > a lot of people have hundreds of thousands of DVDs...
Try reading the interview slower next time.
ken @ Dec 19th 2005 12:10AM
geez, you can do this with media center 2005 and some extenders! i have it running in my brand new home and it does not take rocket science to do this!
Dan White @ Dec 19th 2005 12:10AM
gee, I wonder why the DVD-CCA has a problem with this, hmm, maybe because you can burrow DVDs or rent them and get it into your system and never really pay for them which is exactly what I would do. Why the heck would I buy the DVD when I have this, basically it would still take half the wine cellar (if I had one of those).
Am I missing something? I mean don't you still need the actual disk at some point? Or do they somehow allow you to download the movie itself from their site?
Ben Schiendelman @ Dec 19th 2005 12:10AM
#5 (Dan):
If you're spending $27,000 on the device, it's not going to be cost-effective for you to waste your time using NetFlix or another system where you have to wait for movies. You have a personal assistant who goes and gets 500 new movies for you, and then puts them on the device.
There is a market in the few thousands or ten thousands of users for this technology. I know people who already have a DVD collection for home, one for the beach house, and one for the yacht. There are a lot of them. They could care less how much things cost.
Jeff @ Dec 19th 2005 12:10AM
"It also sends cues to the control system by lowering the lights or setting automatic masking on your home theater system (black velvet panels that move up and down to accommodate the movies dimensions)."
Find me a Windows Media Center PC that can do this.
This is real high-end equipment we're talking about here. If you don't really even understand all the things that it does (and it sounds like a lot of people here don't), then yeah, it's not for you and a MCE will do just fine instead. But the people who want one know who they are and there is not any other machine that can do everything this can, that I know of anyway.
It's no different than buying a $10,000 stereo system or a $20,000 front-projection theater system. "A $1,200 Bose Lifestyle will do the same thing!" Well, sure, basically, but not nearly as well and not with nearly as many features.
Dan White @ Dec 19th 2005 12:10AM
I am not at all doubting that its worth it. In fact it wasn't sure the DVD-CCA would shut them down with all their might I might even consider it myself. And in fact $27K is worth while to me if I NEVER have to buy a DVD again. But thats MY reasoning, which is hardly the point of the device I understand.
So back to my original question, you CAN in fact get any DVD you have into this system then right? so a NetFlix or better yet a Walmart membership should do to fill up the whole thing quickly. I guess while I am at it I could get 10 different walmart memberships and get 30 movies at a time and store them.
What made them think they could really get past this hurdle to start with?
David @ Dec 19th 2005 12:10AM
Actually, my mac DOES control the curtains, the lights, and shuts off the telephone when I'm watching a movie.
Attaching metadeta to a movie so the curtains go to the correct place. Ooooooooh. Consider my panties moist.
If I could only figure out how to have the computer get me chips and a tasty beverage, I'd be all set.
Paul @ Dec 19th 2005 12:10AM
Most people replying to this article don't know the difference between McIntosh and Macintosh. So don't expect them to be rocket scientitsts or yacht owners. These are high dollar systems, that do much more than mythtv or MediaCenter. I can do this with Linux, a 486, 2 NICs, and 128 MB of RAM crowd...
Andrew @ Dec 19th 2005 12:10AM
#6 (Ben):
The cost is $27k today, but it might be a lot cheaper in a few years. If it ever does get down to $1k, the "borrow from Netflix, keep forever" method might be a real concern.
Ryan @ Dec 19th 2005 12:10AM
what about the xbox? ya can do the same thing w/cd-audio and with a lil chip you can do games and dvd's too.. but the thing is you cant get it back off the device.. sure you can go rent tons of dvds and take them back, but you cant get it back and onto media.. so you cant grab the media and take it on the road or anything.. all your movies would then be limited to just this system which like any device could fail and loose all the data..
People are gona pirate regardless what the MPAA trys, there only hope is to make movies less expencive.. why would I spend $5 to steal a dvd (media/case/labels/inet connection) when I could buy the original for $10 or less..
Mike Poindexter @ Dec 19th 2005 12:10AM
I hear people all the time who say they can build something that does all this for a fraction of the price. I did build one and it ran $7,000. It was nowhere near as good, had none of the great integration features and required a lot more work to get all the data populated into the fields. I am an IT Administrator and I do database programming, build DVD players and scalers, etc. so I know what I am doing.
I sold the media server I had and bought a Kaleidescape system and couldn't be happier (well, maybe I could be happier, but I have no regrets). People who say they can do the same thing sound to me like the people who say TiVo isn't worth it because they can record a TV program on their PC for free.
As for the problem with what keeps somebody from getting a netflix subscription and filling up the server: what keeps them from getting a netflix subscription and copying all the DVDs they get? CSS has been cracked and the DVD CCA isn't going to be able to plug the dam because the damn has already busted. Besides, Netflix doesn't stock Superbit titles and Criterion films when cheaper versions are available and I always go for th best copy of a title that is available.
Ben, I don't have a personal assistant to go and buy 500 movies for me.
Ryan, you don't loose anything on this system. The data is stored in RAID and if a drive fails one is shipped overnight to you. The system sends in health diagnostics every day and so if there is a drive that is failing there will likely be a replacement on its way before you even know something is wrong.
Ken, I would like to see your Media Center PC run two simultaneous streams of HD content at 35 mbit. Oh wait, it can't do that. Nor can it run for 3 months without requiring a reboot (that is how long I have had my Kaleidescape system). It also cannot automatically figure out when a film has reached the ending credits and raise the lights, which the Kaleidescape does.
The Kaleidescape is the Rolls Royce of digital media servers. Sure, a hyundai will get you from A to B just like a Rolls Royce, but it isn't the same thing.
Yann @ Dec 19th 2005 12:10AM
Can you imagine a country where you BUY a DVD and you can't decide how you are going to view it and where a backup copy is forbidden!
thanks to DVD CCA + DMCA, the US customer has less freedom in viewing legally purchased content than any other customer in the world.
And it's only the beginning, DRM is comming !
Balzac2m @ Dec 19th 2005 12:10AM
Yeah, sure...
Am I the only wondering how they manage to stream their zillion DVDs with one 100MBit port on the server...
Whooowhooo! Here comes the cluetrain, last stop is Kaleidescape. It is not possible to watch more than 3 Movies at the same time when they have a bitrate of 35MBit.
And when they are stating that you should buy another Server just to be able to watch more movies simultanely (or how its spelled in english), which they do in their FAQ, I would kick this unit in the garbage... With modern Hard drives (which I'm sure they use as they have 300Gio) I would get 40MB (320MBit) reading without problems, which requires somehting called Gigabit... IN YOUR FACE!
I know that whatching a thousand HD-Videos at one isn't something that occurs everyday but I don't spend a million on watching DVDs everyday aswell...
Arvind @ Dec 19th 2005 12:10AM
The Roku PhotoBridge HD1000 can play back your DVD library for $299! And it upconverts to HD quality too.. This product is way overkill!!
Justin @ Dec 19th 2005 12:10AM
Mike,
$7k...have you gone and bought those Gucci 40GB Ultra SCSI drives?
Mr. Malcolm, $50-$60 for storage per movie? Seems as if you went shopping with Mike. It's more like $3 per 8GB of storage given today's ATA drive prices. And that is about to change shortly to under $2.
5-7 years for prices to drop below $1K? Perhaps for a Kaleidescape system. Everyone else will have already stepped up to serve the consumer about four years earlier. The only limiting factor for this technology is storage and bandwidth. They just released some nice and shiny new SANs at CES and isn't cable stepping up to 4Mbps of it's own free will without charging us ... I wonder why?
Ideally, our altruistic cable providers and megalomaniacal multi nationals would love to hold on to the movies for you and charge you per view a la DIVX (remember that brain fart that had every studio executive day dreaming during their morning scalp massage and pedicure?)
Seems to me as if Kaleidescape is all about Intellectual Property and making money of the patents when the big boys come to the trough. And I believe that is what this lawsuit is all about. Time to sue them into bankruptcy and share the spoils for pennies on the dollar.
It's an awesome system if you can afford it and it's a darn bargain if you consider you can waste $20k on a turntable and $100k on a pair of speakers covered in yak fur and tuned inside a tank of Lemur saliva. Let's not forget the tube amp...is that still hot or are the new $5k power cables the new "must waste my money while my factory workers get no health insurance" plaisir du jour?
But than again, you can get a Mac Mini, and wait for Steve to unleash HD on iTunes... bless his little turtle neck sweater.
ali @ Dec 19th 2005 12:10AM
I believe that the issue of renting DVDs and then copying them on to your Kaleidescape has been settled by the US supreme courts decision, that make VCRs legal. Fair use and all that good stuff.
glocks out @ Nov 21st 2007 8:11PM
Dear Engadget,
Your readers are morons.
They have no idea what the Kaleidescape system does, even after they read your interview. A MacMini doesn't have RAID-6, doesn't have 12V triggers, doesn't have multiple streams of video with surround sound audio, and most certainly doesn't have the intuitive UI Kaleidescape offers.
Mike Poindexter is right.
Fin