Zediva Inc, a startup, said it has launched a new service that lets customers watch movies over the Web the same day they are released on DVD, avoiding the usual delays required by film studios.

At a cost of $1.99 a rental, Zediva is the latest company looking to shake up Hollywood's traditional business model, joining popular rental services such as Netflix Inc and Coinstar's. Netflix charges $7.99 a month for its streaming service.

But Netflix and Redbox customers usually must wait a period of 28 days before they can rent newly released DVDs, under agreements that give the studios a chance to sell DVDs before they hit the rental market. Zediva plans to sidestep those delays.

Its service allows a user choose from an online menu of movies, then remotely rent that DVD as well as a DVD player, both of which are stored at a Silicon Valley data center. Zediva then uses the DVD player to stream the movie over the Web, to a laptop, smartphone or TV.

Customers have access to all the typical DVD controls -- fast forward, rewind, pause -- and are given up to 14 days to watch the movie.

Whether Zediva will face legal challenges from Hollywood remains to be seen. Another question is whether the service will have a big enough supply of DVDs and players to meet demand -- particularly for the most popular movies.

(Reporting by Paul Thomasch, editing by Dave Zimmerman)

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