Four years in the making, Vdio finally opens up to Rdio subscribers in the US and UK

Vdio, the premium video service founded by Skype co-founder Janus Friis, emerged from private beta Tuesday night with an offering that looks more like Vudu (s WMT) or iTunes (s AAPL) than Netflix (s NFLX). The service offers users streaming access to major Hollywood movies and TV shows from all of the major studios, with titles either being available for rent or purchase.
Vdio is (at least for now) limited to paying subscribers of Rdio, the music subscription service that Friis launched in 2010, and both services are closely joined at the hip.

Vdio: Like Rdio, except pay-per-view

Vdio looks a lot like Rdio, but the similarities don’t just end with the design. Vdio requires a Rdio account to log in, and the site also uses the same take on social discovery to surface content. Rdio is known for letting users follow other users whose taste in music they share, and the same users one follows in Rdio also show up in Vdio. The service also displays which of its users have watched a certain movie or TV show, much in the same way that Rdio displays music consumption.
Rdio’s VP of Product Malthe Sigurdsson told me Wednesday that this is one key difference from other video services: “It’s people you chose to follow,” he said, adding: “It’s your network, rather than a marketing department.”
Vdio currently offers movies from most of the major players in Hollywood, including Disney, Fox, Warner Bros. and Universal Studios. It also seems to have all the big TV networks on board, allowing it to carry shows from NBC, CBS, ABC and Fox as well as Comedy Central, Showtime, the BCC and others. Notably absent is HBO content, meaning that you won’t find any episodes of Game of Thrones on Vdio. Competitors like Amazon carry episodes from past seasons, while HBO keeps current-season episodes exclusive to its own HBO Go service. Sigurdsson said that the company is hoping to bring HBO on board soon.
Vdio is currently only available to paying Rdio Unlimited subscribers in the U.K. and the U.S., but Sigurdsson said the site would be open up to everyone “later this summer.” He also said that the company is looking to expand to Canada in the coming months.

A screenshot of Vdio's iPad app.

A screenshot of Vdio’s iPad app.

Vdio is going to use Rdio as a promotional vehicle for its service: For its launch, the site is giving paying Rdio Unlimited subscribers a $25 credit.
Videos from Vdio can be streamed with a web browser as well as an iPad app, which comes with a curious work-around: The app doesn’t actually allow users to rent or purchase content, presumably to avoid have to give Apple a cut for in-app purchases. Instead, it only lets users play content they’ve previously purchased on the web. Sigurdsson wouldn’t give me any details for connected devices, but one should expect that the service will eventually arrive on the usual platforms as well. Rdio’s music service is currently available on Roku as well as a variety of mobile devices.

The story of Vdio: It’s been a long time coming

The official launch of the service ends a period of secrecy that surrounded Vdio ever since work on the service began in 2009. The company began its operations in stealth mode under the code name Project WBS, and Friis hired an expert team of online video veterans, many of which had been working with him on the failed P2P video service Joost.
GigaOM broke the story of Vdio’s existence in late 2011, and in an official confirmation of our story, the company said that it was in private beta testing in the U.K. It didn’t reveal any further details about its business model, but compared itself to Netflix and Lovefilm, hinting at a subscription offering — something that made a lot of sense, given that Rdio is also a subscription business.
I learned in the following months that Vdio was considering combining a subscription plan with VOD credits, much in the same way Redbox Instant is now offering its subscribers a subscription tier with coupons for DVD rental. But that kind of offering never launched, and Vdio went through a bit of a rough patch. A big part of its team, including its CTO Justin Erenkrantz, Creative Director Priidu Zilmer and SVP of Engineering Sander Striker were let go.
The remaining staff merged with Rdio, and the company moved key staffers like SVP of Operations Scott Barrow from Los Angeles to the Bay Area to rebuild Vdio from scratch on top of Rdio’s platform. Vdio restarted private beta testing in the U.K. and the U.S. in November, already hinting at a transactional VOD model as well as close ties to Rdio.

Why no subscriptions?

Numerous Rdio users stumbled upon Vdio late Tuesday and early Wednesday, and a question often asked on Twitter was: why doesn’t the service offer any subscriptions? The answer may have to do with the economics behind the subscription business, as well as the huge headstart Netflix already has. Building up a subscription catalog is tough, especially when companies like Netflix and Amazon tie down many titles exclusively, and begin to invest hundreds of millions of dollars into their own productions.
Sigurdsson told me that timing also played a role: The company wanted to launch what it felt was a compelling offer now. However, he told me that some kind of subscription component could still be part of a future offering:

“That is something we would love to do.”

This story was updated several times to include information made available by the company.
Check out the image gallery below for a closer look at Vdio: