Audio Video News

Kaleidescape, the company that pioneered the movie server category and waged an unsuccessful decade-long battle over the right to sell disc-ripping movie servers, has closed its doors.

Word of the closure was confirmed by industry trade publication CE Pro, which published an interview with CEO Cheena Srinivasan over the weekend in which he said “he never planned for this day.”

S&V contributor John Sciacca also spoke with Srinivasan and posted a story on the Residential Systems website earlier today. He wrote:

“…after confirming the bad news, it was clear that he was taking the decision incredibly hard. Throughout our half-hour call he repeatedly referred to the 70 Kaleidescape employees that had been laid off as family, and as a company that ran on passion. While Srinivasan accepted full responsibility for this outcome, ultimately it boiled down to a lack of funding, with the company perhaps taking on a bit too much in developing its latest product. Kaleidescape was a very engineering-heavy company that spent a lot of money on personnel and expensive new product development for its unique Internet Movie Store ecosystem to pivot the company from its disc-based past.

…In March 2014, Kaleidescape was dealt a blow in a court loss to the DVD-CCA {DVD Copy Control Association], over a contract dispute case related to copying DVDs. Not only did this cost the company millions of dollars in legal fees and years of lost focus, it also meant the end of disc importing, the very feature the company was founded on. Resolving that lawsuit, however, allowed the company to move forward and establish studio relationships and unique licenses that ultimately led to “Kaleidescape 2.0” as the company pivoted to become the only premier digital media content delivery solution for home cinemas. While many think this lawsuit was the crux of Kaleidescape’s issues, it was never mentioned by Srinivasan in our conversation.

Rather one of the biggest contributors to the company’s current situation, according to Srinivasan, was a bad “bet” selecting a silicon supplier for 4K Ultra HD and HDR technology. “It is a major product transition, and we were on the leading edge of the technology curve as a small, under-capitalized company,” Srinivasan said. “And, because it was a whole new platform, it took much longer than expected to complete. And, we got caught with some bad, bad luck the last week of January this year.”

…Srinivasan said the company has exhausted its financial resources, and attempts to raise capital didn’t materialize in a timely manner to extend the runway to deal with the transition and volume ramp up to new products.

Kaleidescape is looking for a buyer but has not yet finalized a deal. Srinivasan said he expects the company’s assets to be sold within 30 days.

The company’s web site is still active.

Read the complete Residential Systems story here.