1. DIVX

Divx is a new DVD development. It is basically a video rental system for DVD. Divx titles are purchased and viewed for 48 hours. After this period the title can be "un-locked" for 48 hours, and can therefore be rented continuously. In addition, the title can be un-locked permanently at any time to give unlimited viewing. In either case, the player dials a central computer and bills the consumer's Divx account. To use Divx discs a new type of player is required, which will also play normal DVD titles. Divx players and titles will be released in the United States next year.

Divx was developed by a partnership that includes Circuit City, the United States' largest brand-name consumer electronics retailer, and Ziffren, Brittenham, Branca & Fischer, a prominent Los Angeles entertainment law firm. Disney's Buena Vista Home Entertainment, Paramount, Universal and DreamWorks have all signed multi-year agreements to provide feature films to Divx. Well, Divx discs are just like DVD discs except that you buy the disc for around $5 and you can watch the title for 48 hours. You can then purchase additional time, or buy it outright in some cases.

Firstly, you need to have a Divx player. Two test markets will be chosen next spring and a national rollout will occur late spring/early summer. These players can play Divx discs and normal DVDs, but a regular DVD player - like the ones available now - cannot play Divx discs. Once you have a Divx player you can purchase the Divx discs. They will sell for around $5 which will include 48 hours viewing time. You can watch the Divx title for 48 hours from the first time you put the disc in your player. You can watch the title as many times as you like within the 48 hour period. After the time has expired, the disc can no longer be watched free of charge, you have to purchase additional time. To do this, the player's modem will dial Divx and "un-lock" your disc for another 48 hours. Your Divx account will be charged for the additional time. You can keep doing this and therefore rent the title, or in most cases (so we're told) you will be able to purchase the title outright. Again, your Divx account will be charged the relavent fee. There will also be Divx Gold discs that will be strictly sell-through. So that's basically what Divx is all about.

23.5.2 Advantages

1. The Divx system incorporates extraordinary safeguards against movie copying and piracy. Its multiple layers of protection include individual serialisation of players and discs, triple DES encryption, watermarking and analog copy prevention.
2. Divx is simple and convenient. For a suggested price of less than $5, the Divx system allows consumers to purchase physical ownership of a special, encrypted movie disc that is the same size as the audio compact discs with which most consumers are already familiar.
3. Because Divx provides superior copyright and piracy protection, the studios mentioned above have committed to make all new titles, and almost a thousand catalog titles available for release on Divx discs. New titles will be released on Divx on the same date they are available on VHS. Discussions have also begun with other major studios.
4. Divx expects that discs will be sold by a variety of retail locations, including video rental stores, video and audio sell-through retailers and other software outlets such as consumer electronics and general merchandise stores.
5. The player plugs into a standard phone jack; however, the phone line is not used during movie play. No new phone line is required since the player never interferes with the consumer's phone usage. The player periodically calls the Divx processing centre in "off-hours" to send information for billing.

23.5.3 Disadvantages

6. Anyone who has already invested in DVD will need a new player. No upgrades will be available for current owners.
7. The players will be more expensive - $100 more, which is expected to drop to $50.
8. Environmental consequences. Many people will throw their Divx discs away after the first viewing.
9. Confusion. With two different formats the DVD situation has become slightly confusing for consumers. And with both Divx Gold and normal DVD available, people will want to know what's the difference and which is the best.
10. The plans for Divx may hamper DVD sales. Consumers will probably not want normal DVD if Divx is round the corner.
11. If you lend a Divx disc to someone else they will have to pay for a 48 hour viewing period even if you have already paid for it once - or bought the disc outright.
12. Divx will know exactly what you're watching, when you're watching it.
13. If Divx is a success they will have the monopoly over DVD and DVD rentals.
14. If Divx isn't a success and is stopped, any Divx discs you have purchased will become useless.

There are good and bad points about Divx. First, the optimistic aspects. Many people are saying that Divx spells the end for DVD. But most people do not own DVD players or discs yet. The promise of hundreds of titles from major movie studios can't be bad - lets not forget Paramount have joined in, and it probably won't be very long before Fox commits to DVD/Divx. This means hundreds if not thousands of good titles. This could lead to a two-tier DVD industry: the $25 sell-through and $5 Divx rental titles.

Now, the less optimistic view. Divx technology makes current DVD players obsolete next year. There has already been an anti-Divx backlash. Manufacturers should offer trade-ins, but there are no plans for that at the moment. Then there are all the other points that could make Divx destined for failure. One format may win the day, and then the industry could concentrate on just supporting that one. Whether they will do this remains to be seen. On the one hand Divx could be the best thing that's happened to DVD with more titles, more support, and more sales. On the other hand Divx could be a huge mistake, with vast consumer confusion and lack of sales. Once Divx is released next year we will be able to see more clearly what the future holds for DVD