This year's Christmas shopping season was expected to determine the future of DVD as a video, audio, and data medium. Yet through a joint venture between Circuit City and the Los Angeles law firm of Ziffren, Brittenham, Branca & Fischer DVD's success will be undermined. DIVX or Digital Video Express is a variation of the DVD that will try to become the future's form of video rental. DIVX's pay-per-view like service allows a consumer to lose some of the hassle of video renting or so the company claims. Video stores will "sell" a special $4.49 DIVX disc, instead of renting a DVD. After 48 hours, the DIVX player digitally encrypts the disc using a 112-bit, double-key system rendering it unusable until another payment. DIVX players must be connected to your phone line to enable billing. Although DVD discs will work on DIVX players, DIVX discs will only play on DIVX players, thus excluding early adopters of DVD technology. Does this remind you of the Beta vs. VHS conflict of a while back? Moreover, DIVX actually takes away features from DVD and still costs more to the consumer. It's simply unfair to consumers for any company to release a competing medium that relatively provides no consumer benefit already met by current DVD players. Furthermore, the use of Circuit City's vague advertising has created a mass of confused potential customers and impeded DVD's progress.
Despite Circuit City's strong DIVX push this Christmas season, Circuit City's own financial consultants have doubts about the product. Would you invest your money in a product that even the store doubts the success of the products they sell? In the Quarterly Period Report ending November 30, 1997, DIVX was regarded as having "no assurance that its research and development efforts will be successful, that it will ever have commercially accepted products, or that it will achieve significant sales of any such products." "Other risks include DIVX's limited operating history, history of operating losses, no assurance of successful operations, early state of market development, acquiring and maintaining licensing and manufacturing agreements, competition from substitute products and services, rapid technological change, dependence on key personnel, development or assertions by or against the Company relating to intellectual property rights, and the uncertainty of availability of additional financing."
According to DIVX Inc., the benefits of using DIVX include "unprecedented convenience, flexibility and movie availability at economical prices. Divx offers the freedom of never having to return the movie or pay late fees." However, they fail to mention that the service has many more drawbacks than benefits. Divx customers will pay $100 for the proprietary player. Divx ships without additional footage, dubbing, subtitles and wide-screen pictures common on traditional DVD discs. Divx spokesman commented that "our audience would wonder why there were the black bars on their screen." Doesn't that statement imply that Divx customers are too ignorant about the technology? Divx discs only work players registered to the owner. This means that users will not be able to carry the movie to the friend or neighbor to watch. Moreover, Divx Inc. has no plans to make Divx available for PCs. Divx players must be connected to a standard phone like for billing. The machine calls up the home office in North Carolina and updates charges to the customer's credit card. Most users do not have a phone jack near their family TV, nor would they want to install one.
With so many drawbacks, it comes as no surprise that early adopters of DVD are up in arms. Websites have sprung up with banners saying "Free DVD! Fight DIVX!" and "Your viewing period is over…give us more money. Your friends, Divx." A Warner Home Video billboard on Highway 101 in San Francisco reads "Only Open DVD Delivers." The billboard means that DVD is an open standard, so the discs can be played on numerous platforms. While Divx is being called a "closed" platform due to the fact the discs can only be play on Divx machines. In the ABC News article "Is Video Rental a Goner," John Giberson, owner of www.bandivx.com, comments that "Divx is going to confuse an already confused consumer." "Look at how many people can't program their VCR," he says. "Do you think they'll figure out Divx?" Environmentalists argue that Divx is ecologically unsound because people can throw out the plastic discs. Opponents of Divx have a right to be angry; Divx comes at the moment when DVD players are in about 500,000 U.S. households, with the number expected to grow to 1 million by the end of the year.
In the midst of all the Divx propaganda, DVD is a clear winner. DVD already has over 2,000 movie titles and the number is expected to reach 2,500 by the end of the year. Every major Hollywood studio supports the medium with the exception of Dreamworks SKG. While Divx coming well after the launch of DVD has a little over 80 titles and only six movie studios are supporting Divx. The drawbacks are numerous, but well hidden behind Divx advertising. Divx spokesman comments "If we can get 20 percent of the market in five years, we'll be happy." So if your shopping for DVD player, don't become of a victim of a company that doubts it own success. You know the facts, so I hope you will see through Divx propaganda and buy DVD.
Written By: Compuacid
January 14th, 1999.
