Canadian firm extends Divx reach

Divx, the much maligned and controversial alternative to DVD, is showing signs that it may outlast its detractors.

Divx is a limited-use, pay-per-view version of the 4.7GB DVD (digital versatile disc) which has drawn the ire of home theater enthusiasts irritated by yet another potential standards battle. Also, analysts question whether Divx will slow the sales of DVD titles as movie producers hedge and new consumers ponder which format to buy.

Divx is available at Circuit City and Good Guys stores in San Francisco and Virginia, but other major retailers have been slow to stock their shelves with Divx players.

Future Shop, a Canadian retailer, today announced that Divx players and titles will be available at its 23 American stores. Today's announcement may signal that Divx is turning a corner, analysts say.

"This is the first company, outside of Circuit City and Good Guys, that I've heard of that's carrying it," said Michelle Abraham, an analyst at InStat.

Some analysts have likened the Divx controversy to the struggle between VHS and Beta, another standards battle which resulted in consumer confusion and frustration.

Supporters of Divx, namely Digital Video Express and its parent company Circuit City, purport that the new high-quality video discs are the ultimate in convenience as they require no return trips to the video store. Additionally, because Divx is encrypted for limited use, there is less chance of pirating.

"This is one more alliance, and it's at a time when they desperately need new alliances," said Ted Pine, an analyst at InfoTech, who noted that this will bring Divx into about 1,100 American stores, while approximately 10,000 retailers will carry DVD players by year's end.

"Even if (the Divx marketing) is successful, once they get people into the stores they need to be able to find it (Divx)," Pine said.

"Major retailers are disinclined to carry a line of products that involve paying a royalty stream to a competitor," Pine said. "Circuit City as an investor in Divx means that [any retailer who carries Divx] is ensuring a revenue stream to a competitor."

In addition to inroads in the distribution channel, Digital Video Express has also announced that several major manufacturers, including Panasonic, JVC, and Pioneer, will soon introduce Divx-enabled DVD players.

Although Divx may never win over its detractors, Pine believes that the entire saga is of benefit to consumers.

"The emotional outpouring was quite unexpected and the fact that it persists is also unexpected, but in a way it's a good thing," he said. "It's a strong warning that any manufacturer needs to heed. Anything that makes the manufacturer listen to the consumer is a good thing."