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In the United States, the films are considered "works for hire", and the copyrights are fully owned by the studios, allowing them to license the films for internet distribution without any copyright complications. The "work for hire" doctrine is not universal, however, and some other countries assign copyright interests to the screenwriter, director, and score composer, so it wouldn't necessarily be legal to offer the service worldwide.

Plus, there may well be existing exclusive distribution agreements with Canadian distributors that preclude offering this service to Canadians.

I suspect that you'll see a similar service in Canada, but it will probably be a Canadian company with Canadian copyright lawyers that is better positioned to comply with the details of Canadian copyright law, and integrate with the existing Canadian video distributors.

Honestly, I don't see how this service can possibly succeed. They are charging more than twice the cost of a local video rental store, and the video is only viewable for 24 hours, as opposed to the 5 day rentals that people are used to. Also, the target market for this service would probably be upscale customers who are used to renting DVDs loaded with extra features. These downloads are for the most part bare-bones -- just the movie, no extras. As a kicker, the videos are low-bitrate -- essentially VCD bitrate, which means that they won't look even as good as a commercial VHS tape.

It doesn't seem like the service is going to fly.