Kaleidescape Skipped 3D, But Is ‘Laser-Focused’ on 4K, Executive Says

Kaleidescape, having settled its longstanding court case with the DVD CCA (DVD Copy Control Association) over copyright infringement, is energetically positioning itself as a streaming content provider, Angelika Stalman, vice president-marketing, told us at a gathering of home theater industry professionals in Brooklyn Thursday. “Suddenly people have access to an unlimited amount of movies” that are accessible from tablets, smartphones and PCs, but the experience is being compromised in exchange for convenience, Stalman said. “What’s getting lost is the immersive, cinematic experience."

Kaleidescape claims some 4,000 streaming titles from Warner Bros. and Lionsgate in its cloud-based store. That’s far shy of the 157,000 titles the company provides information for in its Music Guide. By year end, Kaleidescape expects to “fill in the store with all the other studios,” Stalman said. She said every studio has its own business model and stipulations that need to be addressed. Kaleidescape’s position with studios is “entertainment without compromise,” she said. In negotiations with studios there’s discussion of the videos’ sources, and “we want to source the content from the master files, from the actual disc,” she said.

The event was at the home workspace of Theo Kalomirakis, whose TK Theaters were associated with the over-the-top luxury theaters of the dotcom era. The balancing act for TK Theaters and companies like Kaleidescape -- known for being at the cutting edge of new technology -- is to present themselves as the leaders in home theater during the transition period to the next era of home theater, which could include 4K video and Dolby Atmos, while being more accessible in price.

Kaleidescape is “laser-focused” on 4K and “wants to become the reference platform for 4K,” Stalman said. She said there’s not a lot of content in 4K “but it’s where the industry is going.” She said there’s no current timetable for offering 4K downloads. “It depends on the studios and what they create,” she said. “It will take some time before we can deliver a native 4K player. … 2015 is a good year for us to have 4K.”

Kaleidescape has never been a “gadget-driven company” on the “bleeding edge,” Stalman said. The industry and customers are asking for 4K content, she said, “but what, there are a hundred movie titles out there that are actually in 4K that are available in 4K,” she said. “We will be the reference standard for 4K as soon as content is widely available,” she said.

Stalman cited 3D as an example of a format that was in the spotlight and then fizzled. The company looked at 3D when it became the talk of the market but there wasn’t enough demand for it to justify the investment in the catalog, she said. “Our customers watch one movie a year in 3D. Does it make sense to spend $1 million on development cycles on doing 3D when it’s only for a handful of movies?” she said. The 3D content that does show in theaters is primarily for kids and “doesn’t serve our customer base,” she said. The company’s position was, “Let’s skip 3D and focus on 4K because that’s where more of the studio thrust is heading,” she said.

The cost of a Kaleidescape system has dropped from $14,000 to $3,999, Stalman said, with relative affordability as much a part of the company message as convenience and performance. But Kaleidescape has no plans to go consumer-direct, she said. “There are so many capabilities that a Kaleidescape system has,” she said, including integration with a room’s control system, lighting and AV gear that requires an integrator to program. She said aspect ratios of movies differ and a Kaleidescape system has the data associated with a video’s aspect ratio, but an integrator needs to put in place a masking system that fits the aspect ratio to the screen. “We're 100 percent committed to the integrator channel,” she said. Describing the entire home theater experience -- including seating, lights, screen and projector -- she said, “this is not something you can go into Best Buy for and buy off the shelf.” At the Kaleidescape level, “the movie is an art form, and the way they experience it is an art form,” she said. “It’s an experience that has to be integrated and built."

At CEDIA Expo in September, Kaleidescape will focus on its streaming library and its software-driven upgrade service, Stalman said. Citing the company’s past efforts to make viewing on DVDs and Blu-ray discs an “elegant experience,” Stalman said Kaleidescape’s direction is all cloud-based. The company has a software trigger that queries existing customers who play a DVD or Blu-ray disc on whether they'd like to upgrade to a digital file that’s the “final director’s cut,” Stalman said. The Kaleidescape system recognizes the disc, tells users if a digital download is available, and prompts them to download it to the system. Digital conversion fees are $1.99 for a standard-resolution title and $4.99 for Blu-ray quality, she said.

The upgrade service is more than a convenience feature for consumers. Under terms of the settlement with DVD CCA approved by California state courts, DVD content will be playable on Kaleidescape servers until Nov. 29 so consumers (CED June 4 p3) who want to retain features of the Kaleidescape system have to upgrade their ripped content by that date. Kaleidescape said at the time of the settlement that it hoped to have most of its DVD movies available for download from the Kaleidescape Store in the U.S. by November, giving its customers an option for importing movies they own on DVD, but not Blu-ray, into their Kaleidescape systems. Blu-ray discs didn’t fall under the lawsuit.

The streaming world presents its own set of challenges, including the time it takes for consumers to download a high-quality video file and the looming FCC rules on net neutrality that could give ISPs more control over download speed. Commenting on net neutrality, Stalman said, “The Internet is more of a utility and should be labeled a utility rather than the way it is treated right now, as though the ISPs own it,” she said. “It’s like the telephone and needs to be democratized,” she said.