[2] Malcolm self-funded the startup and the company spent over two years developing its technology in "stealth mode".

Kaleidescape originally focused on building home theater movie servers that could store digital copies of customers’ DVD and Blu-ray collections.

The DVD CCA alleged that its CSS License did not permit Kaleidescape's movie servers to serve DVDs from copies on hard disk.

[10] To address the copyright concerns of movie studios, Kaleidescape required the Blu-ray disc to be present when the content was played from the server.

[13] The vault, when paired with the M300 or M500 players, could rip, store, and stream copies of Blu-ray movies throughout a home.

[18][19][20] The Terra provides computing and caching services to enhance the performance of the Strato, and provides extra storage space for movies purchased from the store.

[29] Terra movie servers are used for additional storage space and faster download speeds than Strato.

[41] In October 2013, Kaleidescape announced a multi-year studio agreement with Lionsgate, resulting in the addition of approximately 2,000 titles to the store.