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No KScape hardware yet, where to start?

When you connect an M700 to a Strato (or an Alto), the M-class player in the M-700 is disabled, and it acts as a DV-700. M-class players require a Premiere server to function.

The other alternative would be to add an Alto as well as the M-700 to your system, and Co-Star pair the Alto and the Strato. Then the Alto would play the Blu-ray discs from the vault and the Co-Star switch would automatically select that player when needed. If going this route, you're still not using the player functions in the M-700, so a DV-700 would work just as well.
 
For an Encore system, would a Strato S be the cheapest solution to get started? If my understanding is correct, it's both a player and a server in one.
 
would a costar be needed?
For cataloging Blu-rays and playing DVDs, you don’t need a CoStar. You don’t even need to connect the M700 to your TV. The player on the M700 is disabled when connected to anything other than a Premiere system. The M700 is streaming the DVD data to your Strato over your network. Perhaps a DV700 is a better alternative but ultimately whichever you can cheaper.
 
For an Encore system, would a Strato S be the cheapest solution to get started? If my understanding is correct, it's both a player and a server in one.
Both Strato and Strato S are players and servers. Strato is 2U height. Strato S is 1U height. They both have the same guts and software. There were 3 versions of Strato, one without any HDD, a 6TB version and 10TB version. There are two versions of Strato S, a 6TB version and a 12TB version. All of these are discontinued models. Strato 6TB is the most common to find in the used market.
 
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