Divx debut in limited rollout

After two false starts, Divx is here--if you live in San Francisco or Richmond, Virginia.

The one-use DVD technology has finally launched in test markets in California and Virginia, with a full rollout expected this fall. This is a crucial moment for Divx, as users will determine whether the format is as impractical and unrealistic as its critics contend, or as convenient and revolutionary as its proponents proselytize.

The technology, which immediately caused a furor among early DVD adopters when it was announced last fall, was released today, along with a Divx player by Zenith and 50 titles. The company previously announced a $100 million marketing campaign to start sometime this summer.

Divx is a limited-use consumer DVD format for rental markets developed by Circuit City and Digital Video Express. Consumers buy a disc for about $4.50 and can play it at any time on their Divx player. However, once the disc is played for the first time, the clock starts ticking: Divx discs are only usable for 48 hours after the first playback.

Current DVD owners have objected to a new platform thrown into the DVD mix, which already had hammered out several standards issues. Additionally, some DVD owners believe that because Divx players are connected through a phone line to server computers, consumers' privacy will suffer.

The Zenith Divx player announced today has an estimated retail price of $499, while entry-level DVD-ROM players are going for about $399, according to Ted Pine, an analyst at InfoTech Research. Older DVD players cost as little as $250.

"Divx is trying to hit the mass market with an early adopter price. $499 is not a mass market price," noted Pine. Price is not the only hurdle Divx has to overcome: Divx titles and players are only available now at Circuit City or Good Guys stores, and at least half of the titles announced today already are available on DVD-ROM.

The test launch of Divx has been delayed twice due to limited content.

"One of the ways you differentiate any new platform is by having exclusive content: You create a buzz," said Pine. Without more exclusive titles, "Divx has to rise and fall by the strength of its feature set," which does not incorporate some of the newer DVD-ROM bells and whistles.

In addition, Divx backers have to overcome the overwhelming negative attitude of current DVD-ROM owners toward the newest technology on the block. However, added Pine, if Circuit City and DVE are in the business for the long haul, the technology may succeed in time.

"You cannot fault them for ambition because they want nothing less than to transform the entire rental business," he said. "They're taking a big risk and hoping for a big reward."