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DiVX to move 20 million CE devices by Christmas

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If anyone out there (like us) thinks that there is room and enthusiasm for film download services like Movielink and CinemaNow, but ones which are properly run and which actually want to grow, they could do worse than take a long hard look at what DiVX is up to.

The 100 man start up is on its third round of funding and has already passed into profit and is getting ready for a massive Christmas that could quadruple its revenues overnight. The company has been working for three years towards a scenario when CE manufacturers bundle the DiVX MPEG 4 based-codecs into equipment that is sold in retail. So far it has sold 2 million such devices, but reckons it will sell another 18 million by Christmas. Big jump.

The fundamental difference between DiVX and other codecs is that it is not trying to get video into the narrowest stream it can, but is trying to get the file size down to the smallest it can manage. DiVX claims that its codec encodes video three times faster than Microsoft’s VC9 codec and gives a file that has 30 per cent better visual quality.

Today it says its file sizes are seven to ten times smaller than those on DVDs and it says that a two hour film encoded with DiVX can be downloaded on a half a megabit broadband line in under 45 minutes, and that by using progressive downloads (download enough of the film so that the rest can download while you are watching it) users can begin viewing films in full-screen, high-quality format a few minutes after the download has begun.

This week it has announced that another major portal, Libero.it in Italy, is taking its entire package, its encoding services, compression software and DRM system, to launch a 4,000 item video library to its 8 million customers. Libero is part of Wind Telecomunicazioni SpA. Italy is one of the most competitive, and innovative markets in video on demand, with streaming services launched successfully there through e.Biscom’s FastWeb service. The FastWeb service was the first and is currently the largest, fiber to the home Video on Demand service provider in Europe with 290,000 customers.

Spokesman for DiVX Tom Huntington told us: “We’ve been working on this for three years. We went to the MPAA (Motion Picture Association of America) and they made it clear to us that they would not look at us until we had 10 million customers and that they were not interested in a system that involved a PC. They also helped us with our Digital Rights Management scheme that we built ourselves. “So we’ve been quietly going about our business, first selling the codec to work in software, then we interested a few smaller consumer electronics firms to bundle in our codecs, then some of the integrated circuit manufacturers put it into silicon, and now the major CE firms are virtually all coming out with products between now and Christmas.

That list includes Panasonic, Philips, Toshiba, JVC, Pioneer and Thomson, all of the big names except perhaps Sony. “We have chip licenses now with MediaTek, Philips, LSI Logic and ESS, all the companies that make integrated circuits for DVD players,” said Huntington.

The DiVX vision is to see DVR’s download remote content for playing, burning it into DVDs or viewing through set-tops that simply play the stored file.

“We had to write our own Digital Rights Management software which works by first registering each CE device online and uses our remote servers to store encryption keys and permissions. Once a piece of content has been given permission to play on a registered player they no longer have to be online, but the first time it is played, it needs to connect. But we make that process completely seamless for the customer,” Huntingdon said.

The DRM system can then support multiple business models such as 5 day rental or a set number of views or even outright purchase, depending on what content owners require.

So does all this mean that the major studios are about ready to release content for delivery under DiVX care? “It’s been a long process but we think that the major studios are about to give us access.”

Whatever the outcome with the studios, DiVX will have trouble shaking off its image of a slightly seedy start up. Many of its early releases through its web portal partners were Adult films or Anime or Extreme Sports, whatever content it could get in the early days, although it has amassed 17,000 piece of content in total.

For Libero though the content is mostly Italian, including TV Series and indigenous films, peppered with some US films at the end of their exploitation cycle. In all DiVX is encoding 4,000 piece of content for the Libero site although it has yet to announce how it will charge for these, via subscription, pay per view or a hybrid.

And as for the claims about shipping 20 million DiVX branded devices by Christmas, if that happens it will be a campaign almost as impressive as Apple has achieved with the iPod, and video downloading will at last be on the map. And which Hollywood studio is going to say no to releasing first run content onto a market of that size as it enters the DVD point in its exploitation cycle.

© Copyright 2004 Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of events that have happened each week in the world of digital media. Faultline is where media meets technology. Subscription details here.

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