Behind death of Divx were angry customers

Cynical videophiles and home theatre buffs burned once too often by prematurely obsolete technology played a direct role in bringing Divx down, observers say.

In a nutshell, Divx is--or was--a pay-per-view variation of DVD introduced late last year by Circuit City. Today, Divx ceased operations, partly because of a lack of competitively priced players, partly because of a dearth of hot Divx movie titles, and mainly because of a consumer backlash which can only be compared to the reaction to New Coke.

"The people who run Circuit City are not complete fools-- they just made a bad judgment call," said Jim Porter, of industry newsletter DiskTrend. "They underestimated the sensitivity of people to having one single standard and under-appreciated the difficulty of getting all the movie studios to go in on it with them."

There are valid technological shortcomings to Divx, but they do not explain the overwhelmingly negative emotional reaction to Divx by consumers and the truncated life-span of the technology.

Divx was an easy target for consumers frustrated by years of obsolete products from computer and consumer electronics manufacturers. The rivalry between Divx and open DVD was often compared to the Beta-VHS war or the lackluster success of Laserdisc--but, in reality, the early death of Divx was more a result of consumers' battle scars from earlier standards battle.

"Everyone remembers Beta vs. VHS," Porter said, noting that Circuit City did not consider the "point of view of the suffering customers."

Divx was also a victim of timing, released about a year after DVD hit the market. Its late release played a part in its demise for a number of reasons. "They were late to market, and rowing upstream from the beginning," said Ted Pine, an analyst with InfoTech Research.

Bad timing
Divx's release was also fraught with controversy because it came less than a year after the acrimonious DVD-ROM standards battle, and at a time when the Internet was gaining popularity as a grass-roots communications medium.

It took the major consumer electronics manufacturers, like Philips, Sony, Panasonic, and Toshiba, years to agree on a standard for DVD-ROM players. And just months after they finally hammered out a standard, Circuit City announced it was releasing Divx, a proprietary format not compatible with existing DVD players.

"After two years of warring among the original DVD camps, [the DVD standard] had not been out a year when they came out with a 'yes, but' format," Pine said.

Circuit City's announcement incensed potential early adopters, many of whom had lived through the Beta-VHS war and had useless and expensive Betamax players to prove it. These potential customers, who made DVD one of the fastest selling consumer electronics technologies, not only stayed away from Divx, but took to the Internet to warn others.

"There was a feeling of being burned once too often," Pine said. "In the consumer electronics space, everybody has bought into one technology or another that arrived with great fanfare and was then prematurely obsolete."

Victim of the Web
Internet newsgroups and Web sites dedicated to audio and video news made Divx their cause celebre. These sites lambasted the pay-as-you-go business model, the potential privacy implications of hooking a video player to the Internet, and the dearth of popular titles available on the format.

Technology companies have become famous for announcing "vaporware" months before the products are actually released. In Divx's case, Circuit City's decision to preannounce its release created a vacuum of several months of criticism before Divx even hit test markets.

"Because of the instant feedback mechanism of the Internet, the advantage is no longer on the side of the manufacturer that chooses to [preannounce products]," Pine said. "This is the first technology to run up against the vox populi of the Internet."