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DivX watches HDTV as its compression technology expands

As its video compression and playback technology catches on in U.S., company eyes high-definition television and artists.

DivX is finally getting its U.S. breakthrough.

The video compression and playback technology was found in only about 5 percent of U.S. DVDs in the first quarter, but the figure climbed to about 20 percent in the third quarter, according to Jordan Greenhall, CEO of DivX, the company of the same name.

Jordan Greenhall Jordan Greenhall

The lack of DivX players in the U.S. is mostly just a problem of inertia and not part of a plot to keep the technology out of the country, Greenhall said in a meeting this week, ahead of the annual Consumer Electronics Show in Las Vegas in January. "It's the DivX conspiracy theory. You can get it in Canada, but you can't get it in the U.S."

Manufacturers don't want to put something on their boxes until they see that buyers want it. That's finally begun to happen, so manufacturers are responding.

The company charges a licensing fee of about $1 to $2 every time a manufacturer loads the company's software onto a device. To date, Europe and Asia have been the more popular geographies for the company.

DivX essentially sells software that lets viewers watch videos encoded with DivX software. Years ago, consumers used it for a vehicle for piracy, and the company was reviled by studios. A few years ago, the company started to more actively support digital-rights management and now works with entertainment companies.

A sign of corporate respectability came this year when DivX held an IPO. The stock went out at $16 in September and now sells for more than $28. (Initially, the company planned to price its shares at between $12 and $14.)

So what will DivX talk about at CES? It wants to branch out into high-definition TV. Blu-ray Disc players and HD DVD players are too expensive for consumers in India or Eastern Europe. The company will try to cut deals with Bollywood executives and film producers in those countries to get them to adopt a high-definition version of DivX, Greenhall said.

"The supply of DivX HD content will be compelling," he said.

The San Diego, Calif.-based company also plans to promote Stage 6, its own video site, at the conference. Professional filmmakers post their movies there--some are known, some are unknown. The site mostly seeks to attract artists who aren't getting mainstream recognition.

"We do outreach to find some of this stuff," he said. "If you have been doing postproduction in Hollywood for 10 years, you've got to have a lot of interesting material. The number of people who make a living in the video industry is pretty big."

One thing that won't likely happen soon, though, is a deal with a studio in the United States. In late 2004, the company said it was negotiating with a couple of major studios, but the deals fell through. "It was kind of depressing. We thought they would be realistic," Greenhall said.