Joining the crowded video download market next month is Vudu, a Santa Clara, Calif. startup that's preparing to sell a set-top box with some interesting technology.

Vudu is using what it calls hybrid peer-to-peer networking to speed downloads to the point it can promise instant playback.

The boxes will share content with others nearby to speed downloads, but there are also central servers supplementing the feeds. Users aren't sharing content in the Napster sense; all this activity happens under the covers.

Specifics won't be available until early next month, but the company will sell the boxes for under $500 and rent and sell downloadable movies. It's made deals with pretty much all the key movie studios and will have 5,000 titles available at launch. They'll download at 480p but the box will upscale them as high as 1080p.

The box itself is about the same size as the Apple TV unit and contains a Broadcom chip and a hard drive that's many times the size of the base Apple unit. By the end of the year users should be able to supplement the device with external drives connected via USB.

Patrick Cosson, Vudu's vice president of sales and marketing, said the big library of high-def content and fast speeds will differentiate the product from Apple TV and services such as Netflix downloads and cable providers' video-on-demand.

The images looked great in a demo he gave during a Seattle visit, but I didn't get to see a download in process because he said the hotel's Internet service wasn't up to snuff.

To get instant access, Vudu boxes need at least a 1.7 Mbps broadband connection -- basically the upper tiers of DSL or Comcast.

Cosson said the startup recruited a number of people from Microsoft's WebTV group, including interface designer Keith Ohlfs.