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Circuit City's DIVX Format Bites The Dust!


Dateline 06/21/99

This story began in 1997 when Circuit City, along with a group of greedy Entertainment Lawyers, came up with a Pay-Per-View scheme for viewing movies on your DVD player. Called DIVX (Digital Video Express), the target audience for this format was the consumer that was more into renting movies rather than purchasing them. The intention of Circuit City and their cohorts was to undermine the Open DVD format that was taking a strong hold in the consumer marketplace and eventually supplant it with a system that could bring continuing revenues to Circuit City and their Associates every time one would sit down to watch a DVD movie. They Failed!

The official DIVX product rollout began on Friday, September 25, 1998. The units were referred to as DIVX enhanced DVD players. The players were offered for sale by Circuit City, and a few other retailers and sold for an average $50 to $100 more than a DVD player, they were DVD players that could play DIVX discs as well. This disc format allowed the consumer to make an intitial movie purchase for as low as $4.49, which allowed one to watch the movie as many times as they wanted within a 48 viewing period. In order to watch the film again after that time, the viewer had to reactivate the viewing period with the DIVX computer. In other words, the player was tied in to the phone line and the consumer had to punch in his credit card number to a main-frame computer in Virginia in order to view his movie.

To placate those that wanted to be able to view their movie at any time without having to go through the phone line process, the mainframe could convert your DIVX disc to "Silver" status for a fee, which was about the same as the price of an Open DVD disc, if you add in the initial fee you paid for the DIVX disc at the store. In addition, DIVX discs could only be viewed on the player that it was activated on--you couldn't take the movie to a friend's house to watch it. Lastly, regular DVD players could not play a Divx movie. In essence, this format had the potential of not only taking your viewing freedom away, but the retail and entertainment industry could easily gain the capacity to know what DIVX movies you watched and when you watched them, would the Government then be far behind?

As a result of this potential threat to our home entertainment freedom, an ANTI-DIVX movement sprang up on the internet through such sites as The National Organization To Ban DIVX (website no longer active) and The DVD Resource Page (website no longer active) to lobby consumers not to embrace the new video format.

Whether due to public pressure, or lack of industry and retail support, Circuit City announced the demise of DIVX on June 16, 1999, while claiming (no actual sales numbers to back it up) that the consumer was indeed warming up to the DIVX format.

Every year, new products are brought to Home Electronics market to win our hearts and our dollars. Some products enjoy consumer acceptance very readily, such as the CD, the Camcorder, the VCR, and the Digital Camera. Some products are introduced, fail and are then resurrected in another form and succeed, such as Quadraphonic's evolution into Dolby Surround Sound, and the resurgence of the Minidisc. Other products pave the way for the eventual success of a derivative, such was the fate of BETAMAX (which began the VCR revolution) and the 8-Track Tape (which brought low cost, prerecorded audio to the Automobile) gave way to Audio Cassette and CD player.

Lastly, other products have been destined to fail from the start. Ill-conceived and underestimating the true public need and desire, the RCA CED-video disc and now DIVX have been tossed into the Home Electronics graveyard.

Gambling in the Home Electronics industry is a necessity in order to bring products to market, and success can bring great financial reward (Philips made a fortune with royalties it got from the invention of the audio cassette). However, with Circuit City announcing an $114,000,000.00 loss related to the DIVX enterprise, some marketing decisions can be very, very, costly.

In addition, as big as the above financial loss is for Circuit City, the bigger loss is the financial investment the average consumer has made in a product of dubious usefulness; and what of the trust between the consumer and the home electronics manufacturing and retailing industry? While there is no absolute guarantee that any new product will be successful, does the consumer have to now think twice about his purchase of that "new fangled, does everything" electronics product? And what about any "extended warranties" purchasers of DIVX players may have gotten, will they do any good now?

A little greed is good, it makes our economy run, but blind greed without practical vision can result in stupid mistakes.

DIVX was a stupid mistake.

You can get the details on Circuit City's official announcement regarding the state of DIVX at the following links:

Circuit City Announces Special Pricing, Rebate, and Return Procedures for DIVX Customers
Circuit City DIVX Rebate Form

For more info on the demise of DIVX Check out the following links (NOTE--I am not sure how long some of these links will remain active):

CNN.com - DIVX Dies
Gadget Guru, DIVX IS DEAD

Feel free to email me at homeelectronic@aboutguide.com
with your questions and/or comments.

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